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PALO ALTO, Calif.--Hewlett-Packard Co. is phasing out its defined benefit pension plan, completing the process it started just over a year ago when it closed the plan to new and younger employees.
After Dec. 31, plan participants no longer will earn benefits in the DB plan. Instead, they will be eligible for an enhanced 401(k) plan match.
HP's action is the second step the Palo Alto, Calif.-based technology giant has made to wind down the plan. In January 2006, HP closed its pension plan to new and younger employees and offered those individuals a beefed-up 401(k) plan in which the company matches 100% of employees' 401(k) salary deferrals, up to 6% of pay.
Employees whose combined age and service were at least 62 remained in the DB plan and a 401(k) plan in which HP matches 100% of employees' salary deferrals up to the first 3% of pay and 50% of employees' pretax contributions on the next 2% of pay. Starting Jan. 1, 2008, those individuals will move to the enhanced 401(k) plan.
HP said the changes are "consistent with actions being taken by many of HP's industry peers and other large corporations."
Other companies that have deployed a two-step approach to phase out their defined benefit plans include IBM Corp. of Armonk, N.Y.; NCR Corp. of Dayton, Ohio; and Sears Holding Corp. of Hoffman Estates, Ill.