HP 2014 Annual Report Download - page 125
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 4: Retirement and Post-Retirement Benefit Plans (Continued)
Basis for Expected Long-Term Rate of Return on Plan Assets
The expected long-term rate of return on plan assets reflects the expected returns for each major
asset class in which the plan invests and the weight of each asset class in the target mix. Expected asset
returns reflect the current yield on government bonds, risk premiums for each asset class and expected
real returns which considers each country’s specific inflation outlook. Because HP’s investment policy is
to employ primarily active investment managers who seek to outperform the broader market, the
expected returns are adjusted to reflect the expected additional returns net of fees.
Future Contributions and Funding Policy
In fiscal 2015, HP expects to contribute approximately $686 million to its non-U.S. pension plans
and approximately $35 million to cover benefit payments to U.S. non-qualified plan participants. HP
expects to pay approximately $47 million to cover benefit claims for HP’s post-retirement benefit plans.
HP’s policy is to fund its pension plans so that it makes at least the minimum contribution required by
local government, funding and taxing authorities.
Estimated Future Benefits Payments
As of October 31, 2014, HP estimates that the future benefits payments for the retirement and
post-retirement plans are as follows:
Non-U.S.
U.S. Defined Defined Post-Retirement
Fiscal year Benefit Plans Benefit Plans Benefit Plans
In millions
2015 ........................................ $ 801 $ 567 $ 91
2016 ........................................ 588 528 94
2017 ........................................ 613 560 82
2018 ........................................ 648 606 71
2019 ........................................ 694 659 68
Next five fiscal years to October 31, 2024 ............... 3,850 3,980 278
Note 5: Stock-Based Compensation
HP’s stock-based compensation plans include incentive compensation plans and an employee stock
purchase plan (‘‘ESPP’’).
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