HP Inc., Palo Alto, Calif., Has entered into an agreement to purchase a group annuity contract from Prudential Insurance Co. of America to transfer approximately $ 5.2 billion in US pension liabilities .
The transaction, which removes nearly half of the assets of the computer hardware company’s US pension plan from its balance sheet, is expected to close in the fourth quarter of the company’s fiscal year ending Oct. 31.
When complete, the group annuity purchase will transfer responsibility for paying benefits to approximately 41,000 retirees and beneficiaries of the HP Inc. pension plan, the company said in its 10-Q filing with the SEC on Sept. 3. .
According to the plan’s most recent Form 5500, there were a total of 41,074 retired or separated members as of October 31. Also on that date, the HP Inc. pension plan had $ 10.9 billion in assets as of October 31. , 2020, according to this filing of Form 5500.
This is the second major retirement risk transfer transaction for HP in as many years.
During the quarter ended October 31, 2020, the company paid approximately $ 2 billion to former employees of its main U.S. pension plan who elected to receive lump sums offered by the company. About 12,000 former employees invested in the HP Inc. pension plan who had not yet retired at that time chose the lump sum option during the window that began on June 5 and ended on July 3.
HP spokespersons Rekha Parthasarathy and Vanessa Yanez could not be reached immediately for further information.