Hewlett-Packard Co., Palo Alto, Calif., will freeze its U.S. pension plan to most employees on Jan 1, said Ryan Donovan, a Hewlett-Packard spokesman. He said employees whose age plus years of service with the company total 62 or more will continue to accrue benefits under the defined benefit plan. Other employees will keep benefits they've already accrued and the company will increase its matching contribution to an existing $8.1 billion 401(k) plan to 6% from 4%. The pension plan will also be frozen to members of Hewlett-Packard senior management who do not meet the criteria to continue accruing benefits, Mr. Donovan said.
The action is part of a Hewlett-Packard plan announced today to save $1.9 billion annually that will also include 14,500 job cuts over the next six quarters. Hewlett-Packard officials are primarily "looking to streamline the organization" and to reduce cost, Mr. Donovan said. He said many competitors only offer 401(k) plans.
Hewlett-Packard's U.S. pension plan had about $3.2 billion in assets and nearly $5 billion in liabilities as of Oct. 31, according to the company's annual report. The 401(k) plan had about $8.1 billion in assets as of Dec. 31, according to Hewlett-Packard's Form 11-K filed June 29 with the SEC.