This excerpt taken from the HPQ DEF 14A filed Jan 29, 2008.
Changes to U.S. Pension Plans at HP, 2002 through 2007
In an effort to reduce costs and provide benefits more in line with our peer technology companies, HP has made significant changes to its U.S. pension programs over the past few years. These changes have applied to the NEOs at the same time and on the same terms as the changes have applied to other eligible U.S. employees.
In general, U.S. employees hired before January 1, 2003 were eligible to participate in the HP Retirement Plan (the "RP"), a traditional defined benefit pension plan. Of the NEOs, Ms. Lesjak, Ms. Livermore, Mr. Joshi and Mr. Wayman are in this category. Employees who joined HP as part of the merger with Compaq Computer Corporation ("Compaq") became participants in the RP effective January 1, 2003 and began accruing benefits on and after that date. Mr. Robison is in this category.
Employees who joined HP between January 1, 2003 and December 31, 2005, including Mr. Hurd, were eligible to participate in the HP Cash Account Pension Plan (the "CAPP"). The CAPP is a cash-balance plan that is the successor to the Digital Equipment Corporation ("Digital") cash balance plan; HP assumed sponsorship of this plan following HP's acquisition of Compaq.
Each of the RP and the CAPP is a qualified retirement plan within the meaning of Section 401(a) of the Code, and for each plan there is a parallel "excess" or non-qualified plan that provides benefits for the NEOs and other eligible employees who earn pension-eligible compensation in excess of the IRS limits applicable to the qualified plans. The excess plan for the RP is called the HP Excess Benefit Plan (the "EBP"); the excess plan for the CAPP is the HP Cash Account Restoration Pension Plan (the "CARP").
The assets of the RP and the CAPP were merged in November 2005, and the combined plan is now called the HP Pension Plan, but the benefits continue to be determined separately for the RP and the CAPP portions of the HP Pension Plan.
In connection with certain cost reduction and restructuring efforts that were announced in July 2005, HP ceased pension accruals in both the RP and the CAPP (and correspondingly in the EBP and the CARP) effective December 31, 2005 for employees whose combination of age and qualifying service was less than 62. Employees with 62 or more "age plus service points" continued to accrue benefits in their existing pension plan after that date (either the traditional RP or the cash-balance CAPP, and, with respect to amounts in excess of IRS limits, the corresponding non-qualified EBP and CARP). Under these changes, Mr. Hurd and Mr. Robison ceased benefit accruals effective December 31, 2005 in the CAPP/CARP and RP/EBP, respectively, and the other NEOs continued to accrue pension benefits in the RP/EBP.
In February 2007, HP announced further benefit changes, including the cessation of pension accruals for all remaining U.S. employees effective December 31, 2007. HP's NEOs were subject to these changes on the same basis as other U.S. employees. As a result, Ms. Lesjak, Ms. Livermore and Mr. Joshi ceased accruing benefits in the RP/EBP effective December 31, 2007. On and after January 1, 2008, no U.S. employee will earn a pension benefit.
U.S. employees who ceased pension accruals in 2005 (including Messrs. Hurd and Robison) became eligible for a higher matching contribution under the HP 401(k) Plan beginning in 2006, as well as a 6% matching contribution on certain base pay deferrals under the non-qualified HP Executive Deferred Compensation Plan (the "EDCP"). The remaining NEOs became eligible for the 6% matching contribution in the HP 401(k) Plan and the EDCP effective January 1, 2008.