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Retirement and Post-Retirement Benefit Plans
6 Months Ended
Apr. 30, 2011
Retirement and Post-Retirement Benefit Plans  
Retirement and Post-Retirement Benefit Plans

Note 14: Retirement and Post-Retirement Benefit Plans

  • Modifications to Defined Contribution Plans

        HP offers various defined contribution plans for U.S. and non-U.S. employees. As disclosed in our Consolidated Financial Statements for the fiscal year ended October 31, 2010, HP matching contributions under both the HP 401(k) Plan and the EDS 401(k) Plan in fiscal 2010 were on a quarterly, discretionary, performance-based match of up to a maximum of 4% of eligible compensation for all U.S. employees to be determined each fiscal quarter based on business results. HP's matching contributions for each of the quarters in fiscal 2010 were 100% of the maximum 4% match. Effective in fiscal year 2011, the quarterly employer matching contributions in the HP 401(k) Plan and the EDS 401(k) Plan are no longer discretionary and are equal to 100% of an employee's contributions, up to a maximum of 4% of eligible compensation. In addition, effective December 31, 2010, the EDS 401(k) Plan was merged into the HP 401(k) Plan.

        HP's net pension and post-retirement benefit costs were as follows:

 
  Three months ended April 30  
 
  U.S.
Defined
Benefit Plans
  Non-U.S.
Defined
Benefit Plans
  Post-
Retirement
Benefit Plans
 
 
  2011   2010   2011   2010   2011   2010  
 
  In millions
 

Service cost

  $   $   $ 89   $ 82   $ 2   $ 3  

Interest cost

    149     144     177     165     9     12  

Expected return on plan assets

    (186 )   (165 )   (225 )   (188 )   (9 )   (8 )

Amortization and deferrals:

                                     
 

Actuarial loss

    8     7     60     53         5  
 

Prior service benefit

              (4 )   (3 )   (20 )   (22 )
                           

Net periodic benefit (gain) cost

    (29 )   (14 )   97     109     (18 )   (10 )

Curtailment gain

                        (13 )

Settlements

            2              

Special termination benefits

            6     11          
                           

Net benefit (gain) cost

  $ (29 ) $ (14 ) $ 105   $ 120   $ (18 ) $ (23 )
                           

 

 
  Six months ended April 30  
 
  U.S.
Defined
Benefit Plans
  Non-U.S.
Defined
Benefit Plans
  Post-
Retirement
Benefit Plans
 
 
  2011   2010   2011   2010   2011   2010  
 
  In millions
 

Service cost

  $   $   $ 174   $ 168   $ 4   $ 6  

Interest cost

    297     289     346     337     17     24  

Expected return on plan assets

    (372 )   (331 )   (438 )   (386 )   (18 )   (15 )

Amortization and deferrals:

                                     
 

Actuarial loss

    17     14     122     109     1     10  
 

Prior service benefit

            (7 )   (5 )   (41 )   (43 )
                           

Net periodic benefit (gain) cost

    (58 )   (28 )   197     223     (37 )   (18 )

Curtailment gain

                        (13 )

Settlements

            2              

Special termination benefits

            8     11          
                           

Net benefit (gain) cost

  $ (58 ) $ (28 ) $ 207   $ 234   $ (37 ) $ (31 )
                           
  • Employer Contributions and Funding Policy

        HP previously disclosed in its Consolidated Financial Statements for the fiscal year ended October 31, 2010 that in fiscal year 2011 it expected to contribute approximately $747 million to its pension plans and approximately $30 million to cover benefit payments to U.S. non-qualified plan participants. In addition, HP disclosed that it expected to pay approximately $40 million to cover benefit claims for HP's post-retirement benefit plans. HP's funding policy is to contribute cash to its pension plans so that it makes at least the minimum contribution required by local authorities.

        During the six months ended April 30, 2011, HP made $262 million of contributions to its pension plans, paid $14 million to cover benefit payments to U.S. non-qualified plan participants, and paid $14 million to cover benefit claims under post-retirement benefit plans. During the remainder of fiscal 2011, HP anticipates making additional contributions of approximately $485 million to its pension plans and approximately $16 million to its U.S. non-qualified plan participants and expects to pay up to $26 million to cover benefit claims under post-retirement benefit plans. HP's pension and other post-retirement benefit costs and obligations are dependent on various assumptions. In addition, during the second quarter of fiscal 2011, pension plans in the United Kingdom were re-measured primarily due to legislative changes. As a result of these legislative changes and higher discount rates at remeasurement, the pension obligation was reduced by approximately $355 million. Differences between expected and actual returns on investments will be reflected as unrecognized gains or losses, and such gains or losses will be amortized and recorded in future periods. Poor financial performance of invested assets in any year could lead to increased contributions in certain countries and increased future pension plan expense. Asset gains or losses are determined at the measurement date and amortized over the remaining service life or life expectancy of plan participants. HP's next measurement date is October 31, 2011.