Hewlett Packard Limited Retirement Benefits Plan Digital Section Cas · CAS-74325-Z1Q4

CAS-74325-Z1Q4

Ombudsman’s Determination Applicant Mr L

Scheme Hewlett-Packard Limited Retirement Benefits Plan: Digital Section (the Plan)

Respondent Hewlett Packard Enterprise (HPE)

Outcome

Complaint summary

Background information, including submissions from the parties Mr L was employed by Digital Equipment Company Ltd (DEC) from 1978 to 1994, when he was made redundant at the age of 55. DEC was acquired by Compaq Computers (Compaq) in 1998 and in 2002, Compaq was acquired by HPE.

1 https://www.legislation.gov.uk/ukpga/1995/26/section/51

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“Following a review, the company has decided that no discretionary increase will be provided this year.”

“The company has decided a discretionary increase of 3% will be applied to the Non-Qualifying Portion of your Pre ‘97 pension provided this year...”

• He was complaining about the fact he had Pre 97 Benefits with DEC and that HPE had unfairly discriminated against him by not awarding increases to his Pension in line with increases awarded to members with Post 97 Benefits.

• HPE’s failure to apply increases to his Pension had resulted in a very considerable and declining standard of living which had reached a situation of deep concern regarding his financial wellbeing, and that of his wife, in his remaining years.

• Appeals to HPE for fair and equal treatment and a justification for HPE’s covert policy in this respect, appeared to have been ignored.

• HPE’s president had said that everybody should treat others equally, so this was what he was asking for.

“As the subject of your complaint is not an issue that concerns any actions taken by the Trustee, but rather one relating to an exercise of the company’s discretion, the IDRP is not the appropriate route to bring a complaint. As such, the Trustee will not be taking action under the IDRP.

The issue you raise has been addressed in correspondence between you and the company over some years, so I believe you are fully aware of the company’s position.”

2 HPE provided copies of numerous correspondence between Mr L and itself between March 2022 and July 2022. 2 CAS-74325-Z1Q4

In 2024, HPE wrote to pensioner members of the Plan. The letter said in summary:-

• It had determined that no discretionary increases would be granted that year. This followed its usual annual review, including representations by the Trustee, where careful consideration was given to the matter and various factors were taken into account in reaching this decision.

• The factors it considered could change over time as well as the weighting given to them. As is the legal requirement, it would continue to review whether to award a discretionary increase annually.

Summary of Mr L’s position

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• The Rules permit increases at HPE’s discretion. It was custom and practice by both DEC and Compaq to pay increases annually to all pensioners based on the Retail Prices Index.

• The 1995 Act did not include any guarantees regarding cost of living increases for pensioners with Pre 97 Benefits. HPE has exploited this loophole in the 1995 Act and the discretionary nature of the Rules, to decide that it would not pay increases for Pre 97 Benefits. However, it pays regular increases to pensioners with Post 97 Benefits.

• HPE had not awarded increases to pensioners with Pre 97 Benefits for 18 years. The annual recommendations from the Trustee and actuaries have been consistently ignored by HPE. The increase of 3% paid in 2022 was made by the Trustee and not HPE.

• HPE has declined to explain the reasons for no discretionary increases being applied to Pre 97 Benefits, or to justify its decision not to do so. HPE’s finances are sound and there is no affordability problem.

• He has suffered a loss in the value of his pension by approximately £250 per annum. He would like HPE to provide discretionary increases to Pre 97 Benefits. HPE’s covert policy of non-payment of increases has cost him over £112,000 plus interest, and caused him to continue working in his 80s.

• He suggests that HPE had acted and continues to act, in an appalling and disingenuous manner towards members with Pre 97 Benefits over many years. It has bent the rules to save substantial costs from increasingly impoverished former employees. It was clear that HPE had a covert and avaricious policy of non- payment and exploited the shortcoming of the 1995 Act.

• Based on the financial cost and affordability summary, there was no question of an affordability issue and an increase of 5%3 would hardly be material in the overall financial reports. An increase of 5% would be equal to just 3% of the remuneration of HPE’s top six executives.

• If HPE was honest and open, it would publish minutes of its review meetings, and would set out and justify the reasons for rejecting the advice of the Trustee each year. HPE refuses to do so, and he suggest this is unacceptable from a prosperous international organisation that claims to be one of the world’s most ethical companies. The annual review is a forgone conclusion and amounts to a cruel charade.

3 Mr L stated this was the percentage awarded to pensioners with Post 97 Benefits.

4 CAS-74325-Z1Q4 • HPE is guilty of targeted discrimination against a vulnerable group of pensioners, treating them unfairly compared to other groups of pensioners, solely because these pensioners do not have any protection under UK law and the Rules do not give any guarantee.

Summary of HPE’s position

4 Rule 12.2.2 as detailed in the Appendix.

5 CAS-74325-Z1Q4 “Pensions will be reviewed by the Principal Employer at least annually and may be further increased by such amount and at such times as the Principal Employer decides, acting on actuarial advice.”

• the power to grant discretionary increases (in these circumstances) was not a fiduciary power;

• the employer was entitled to have regard to its own interests in exercising its discretion to award increases, notwithstanding strong expectations that the previous practice of granting increases would continue;

5 PO-4065 and CAS-43873-Q5Q2 6 PO-4065

6 CAS-74325-Z1Q4 • the obligation of good faith is not to be taken as requiring an employer to arrive at a decision which is substantively “fair” when exercising a power given to him in apparently unfettered terms by pension scheme rules; and

• it was not necessary for the employer to engage “in genuine negotiation” with the trustees of the scheme as the discretion was the employer’s alone.

Adjudicator’s Opinion

“Pensions will be reviewed by the Principal Employer at least annually and may be further increased by such amount and at such times as the Principal Employer decides, acting on actuarial advice.”

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Mr L did not accept the Adjudicator’s Opinion and in response reiterated comments that he had made in earlier submissions to TPO.

As Mr L did not accept the Adjudicator’s Opinion, the complaint was passed to me to consider. Mr L’s further comments do not change the outcome. I agree with the Adjudicator’s Opinion.

Ombudsman’s decision

8 CAS-74325-Z1Q4 I do not uphold Mr L’s complaint.

Dominic Harris

Pensions Ombudsman 21 August 2025

Relevant extract of the Hewlett-Packard Limited Retirement Benefits Plan - Digital Section, dated 22 August 2019 “12 General rules about pensions

…

12.2 Dates of increases

9 CAS-74325-Z1Q4 …

12.2.2 Rates of increases

Any part of a pension in payment that is attributable to Pensionable Service on or after 1 July 2005 will increase in each year by the lower of:

(i) 2.5% per annum; or

(ii) the increase in the retail prices index over a 12-month period ending on 31 January. However, any part of a pension in payment that is attributable to Pensionable Service between 6 April 1997 and 1 July 2005 will instead increase by the lower of: (a) 5% per annum; or

(b) the increase in the retail prices index over a 12 month period ending on 31 January. However, it may be that a Member has paid additional contributions under Rule 3.2.2 (additional contribution for a 5% LPI Member). If so, the above increase applying to Pensionable Service between 6 April 1997 and 1 July 2005 will also apply to a pension in payment attributable to such periods of Pensionable Service after 1 July 2005. In the case of a member who joined the Plan before 6 April 1997, any Member’s pension under Rule 4.4 (early retirement through Incapacity) and any pensions payable on a Member’s death in Service will be treated as attributable to Pensionable Service on and after 6 April 1997, except to the extent that they are attributable to actual Pensionable Service before that date. If an interval between increases is less than 12 months, the increase will be an appropriate proportion of the full increase described above. …”

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