During the past decade, Hewlett Packard Española (HPE) has showed its commitment to develop and improve the pension provision of its employees, which has resulted in a new, efficient structure.
Until 1992, HPE had an internal defined benefit (DB) pension plan that covered all its employees, and for those joining the company after that date, a defined contribution (DC) scheme was created. The current pension plan is the result of a long re-definition process during which the company worked with consultants William M Mercer and Banco Sabadell, the fund’s gestora. Under the new system, members of the old DB plan could voluntarily switch to the new DC scheme which would be financed through a pension plan.
During 2000, and following a requirement of the Spanish law, the company externalised its pension obligations. The externalisation process in Spain has proved to be a complex one and has not yet been finalised by many companies that are still discussing the value of this obligation.
HPE, being part of an American multinational, decided to use an American system to calculate its pension obligations, using the concepts of accumulated benefit obligation (ABO) and protected benefit obligation (PBO), to calculate past services within the company.
To date, most employees have chosen to join the DC scheme, thus showing the high level of acceptance the new system has received. However, this has not been an easy task and the communication of information for its members has become the key to success. For those who have chosen to stay in the DB plan, a new element was introduced aiming to bring more flexibility to the way pensions can be paid. Now members can choose either to receive the annuities they are entitled to or arrange different methods of payment of the equivalent capital.
Once the final design of the new plan was finalised, HPE started a challenging process aimed to introduce the new pensions concept to its staff.
The company believes that employees need to have all the necessary tools to make the right decisions and, first of all, understand the externalisation process.
This communication project was based on extensive mailing campaigns, presentations and one-to-one sessions conducted by the companies, PricewaterhouseCoopers, William M Mercer and Banco Sabadell.
During the second quarter of 2000, HPE organised a series of seminars to explain the new structure of the company’s pension obligation, distributing summaries of the system’s functioning among employees. This concluded with an electoral process to choose the plan’s comisión promotora.
Potential members decided whether to join the plan or not in September last year. During this period, communications efforts were intensified, and employees were notified about the value of their past services. A document containing ‘frequently asked questions’ was published on the company’s intranet with a help-desk service.
Because the pension plan started its life at a time characterised by high volatility, the improvement of the availability of financial and investment management information regarding the scheme has been a major focus during the last year. Seminars organised by both Banco Sabadell and William Mercer during this period concentrated on discussing investment strategies and analysing portfolio returns. In addition, quarterly reports were sent by email to all members by the plan’s comisión de control (board of trustees).
In terms of communication, HPE’s challenge for the near future is to complete the design of the plan’s web site, a project in which the company is working together with Banco Sabadell. By using this electronic tool members will be able to access information on the plan, follow transactions in their individual accounts, change personal details and make additional voluntary contributions to the scheme. Once the service is running, HPE will also be able to make contributions online and inform the gestora about any changes related to membership.
During the whole process of definition and communication of the company’s new pension provision structure, HPE has showed its commitment to use the highest level of professionalism and transparency. The results have been a great involvement from members in everything to do with the plan’s functioning.
Although a very young scheme, the efforts made during the last years in plan design and administration have provided HPE with the necessary framework to face the future.
The high mobility of workers between countries, has also forced HPE to pay special attention to expatriates and everything related to developments towards the European harmonisation in pension issues. To improve the situation of its mobile employees will be one of HPE’s major concerns in the years to come and the most important matter to be resolved within the company’s pension provision arena.

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