v3.6.0.2

Retirement and Post-Retirement Benefit Plans | 12 Months Ended
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Oct. 31, 2016
Compensation and Retirement Disclosure [Abstract] |
Retirement and Post-Retirement Benefit Plans | Retirement and Post-Retirement Benefit Plans Defined Benefit Plans The Company sponsors defined benefit pension plans worldwide, the most significant of which are in the UK. There are three pension plans in the UK which are all closed to new entrants, but under which, members continue to earn benefit accruals. Two of these plans provide pension benefits to employees predominately within the Enterprise Services segment, the remaining plan provides pension benefits to employees within the remaining HPE segments. All of these plans provide benefits based on final pay and years of service and generally require contributions from members. These plans are accounted for as single employer benefit plans. The net benefit plan obligations and the related benefit plan expense for these plans have been recorded in the Company's Consolidated and Combined Financial Statements for fiscal 2016. Prior to October 31, 2015, and with the exception of certain defined benefit pension plans of which the Company was the sole sponsor, certain Hewlett Packard Enterprise eligible employees, retirees and other former employees participated in certain U.S. and international defined benefit pension plans offered by former Parent. These plans, which included participants of both Company employees and employees of former Parent, were accounted for as multiemployer benefit plans and the related net benefit plan obligations were not included in the Company's Combined and Consolidated Balance Sheets through July 31, 2015. The related benefit plan expense was allocated to the Company based on the Company's labor costs and allocations of corporate and other shared functional personnel. Former Parent contributions to these Shared plans were $518 million in fiscal 2015 and $277 million in fiscal 2014. In connection with the Separation, during the three months ended October 31, 2015, former Parent transferred plan assets and liabilities primarily associated with Hewlett Packard Enterprise eligible employees, retirees and other former employees to the Company. As a result, in the fourth quarter of fiscal 2015, plan assets of $11.7 billion, a benefit obligation of $11.9 billion and an accumulated other comprehensive loss of $2.6 billion, primarily related to non-U.S. defined benefit pension plans, were assumed and recorded by the Company. The net benefit plan obligations transferred were remeasured on the date of transfer resulting in an additional loss of $553 million recognized in Accumulated other comprehensive loss for the three months ended October 31, 2015. Post-Retirement Benefit Plans The Company sponsors retiree health and welfare benefit plans, the most significant of which is in the U.S. Generally, employees hired before August 2008 are eligible for employer credits under the Hewlett Packard Enterprise Retirement Medical Savings Account Plan (“RMSA”) upon attaining age 45. Employer credits to the RMSA available after September 2008 are provided in the form of matching credits on employee contributions made to a voluntary employee beneficiary association. Upon retirement, employees may use these employer credits for the reimbursement of certain eligible medical expenses. Prior to July 31, 2015, former Parent sponsored retiree health and welfare benefit plans, the most significant of which were in the U.S. All of these plans were accounted for as multiemployer benefit plans. The Company recognized post-retirement benefit credits of $28 million in fiscal 2015 and $18 million in fiscal 2014 in the Combined and Consolidated Statements of Earnings. In connection with the Separation, during the three months ended October 31, 2015, the former Parent transferred a benefit obligation of $150 million, plan assets of $40 million and accumulated other comprehensive income of $10 million, primarily associated with Hewlett Packard Enterprise eligible employees, retirees and other former employees to the Company. Defined Contribution Plans The Company offers various defined contribution plans for U.S. and non-U.S. employees. Prior to the Separation, former Parent offered various defined contribution plans for U.S. and non-U.S. employees. The Company's defined contribution expense was approximately $438 million in fiscal 2016, $450 million in fiscal 2015 and $480 million in fiscal 2014. Prior to the Separation, U.S. employees were automatically enrolled in the Hewlett-Packard Company 401(k) Plan ("HP 401(k) Plan") when they met eligibility requirements, unless they declined participation. The quarterly employer matching contributions in the HP 401(k) Plan were 100% of an employee's contributions, up to a maximum of 4% of eligible compensation. Effective November 1, 2015, the Company's active employees became eligible to participate in the newly created Hewlett Packard Enterprise Company 401(k) Plan. Effective January 1, 2017, the annual employer matching contributions in the updated HPE 401(k) Plan will be 50% of an employee's contributions, up to a maximum of 6% of eligible compensation. Prior to the amendment, the quarterly employer matching contributions in the HPE 401(k) Plan were 100% of an employee’s contributions, up to a maximum of 4% of eligible compensation. Pension Benefit Expense The Company's total net pension benefit cost recognized in the Consolidated and Combined Statements of Earnings was $140 million in fiscal 2016, $341 million in fiscal 2015 and $142 million in fiscal 2014. The amounts for fiscal 2015 and fiscal 2014 include $201 million and $6 million, respectively, of related benefit plan expenses that were allocated to the Company by former Parent for multiemployer pension plans. In January 2015, former Parent offered certain terminated vested participants of the U.S. HP Pension Plan (a Shared plan) a one-time voluntary window during which they could elect to receive their pension benefit as a lump sum payment. As a result, the former Parent pension plan trust made lump sum payments to eligible participants who elected to receive their pension benefit under this lump sum program. The defined benefit plan settlement charges of $225 million recorded in the Combined and Consolidated Statement of Earnings for the year ended October 31, 2015 primarily include settlement expenses and additional net periodic benefit costs resulting from this lump sum program incurred by former Parent, which was determined to be directly attributable to the Company, and the impact of the remeasurement of the related U.S. defined benefit plans. The Company's net pension and post-retirement benefit costs that were directly attributable to the eligible employees, retirees and other former employees of Hewlett Packard Enterprise and recognized in the Consolidated and Combined Statements of Earnings for fiscal 2016, 2015 and 2014 are presented in the table below. In addition, the table includes costs related to the plans transferred from former Parent in the fourth quarter of fiscal 2015.
| For the fiscal years ended October 31,
| 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
| U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans |  | Post-Retirement Benefit Plans
| In millions
Service cost | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 254 |  |  | $ | 121 |  |  | $ | 74 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |
Interest cost | — |  |  | 16 |  |  | 15 |  |  | 549 |  |  | 337 |  |  | 283 |  |  | 6 |  |  | 1 |  |  | — |
Expected return on plan assets | — |  |  | — |  |  | — |  |  | (983 | ) |  | (570 | ) |  | (364 | ) |  | (2 | ) |  | — |  |  | — |
Amortization and deferrals: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Actuarial loss | — |  |  | 2 |  |  | 2 |  |  | 311 |  |  | 218 |  |  | 82 |  |  | (3 | ) |  | — |  |  | — |
Prior service benefit | — |  |  | — |  |  | — |  |  | (24 | ) |  | (6 | ) |  | (2 | ) |  | — |  |  | (1 | ) |  | — |
Net periodic benefit cost | — |  |  | 18 |  |  | 17 |  |  | 107 |  |  | 100 |  |  | 73 |  |  | 4 |  |  | — |  |  | — |
Curtailment gain | — |  |  | — |  |  | — |  |  | (5 | ) |  | — |  |  | (1 | ) |  | — |  |  | — |  |  | — |
Settlement loss | — |  |  | — |  |  | — |  |  | 9 |  |  | 4 |  |  | 8 |  |  | — |  |  | — |  |  | — |
Special termination benefits | — |  |  | — |  |  | — |  |  | 25 |  |  | 18 |  |  | 39 |  |  | — |  |  | — |  |  | — |
Net benefit cost | $ | — |  |  | $ | 18 |  |  | $ | 17 |  |  | $ | 136 |  |  | $ | 122 |  |  | $ | 119 |  |  | $ | 4 |  |  | $ | — |  |  | $ | — |
The weighted-average assumptions used to calculate net pension benefit cost for Direct plans in fiscal 2016, 2015 and 2014 and for costs related to the plans transferred from former Parent in the fourth quarter of fiscal 2015 were as follows:
| For the fiscal years ended October 31,
| 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
| U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans |  | Post-Retirement Benefit Plans
Discount rate | 3.8 | % |  | 4.4 | % |  | 4.8 | % |  | 3.0 | % |  | 3.0 | % |  | 4.2 | % |  | 4.6 | % |  | 4.7 | % |  | — |
Expected increase in compensation levels | 2.0 | % |  | — |  |  | — |  |  | 2.5 | % |  | 2.4 | % |  | 2.8 | % |  | — |  |  | — |  |  | — |
Expected long-term return on plan assets | — |  |  | — |  |  | — |  |  | 6.2 | % |  | 6.9 | % |  | 7.8 | % |  | 4.0 | % |  | — |  |  | — |
Prior to October 31, 2016, the Company estimated the service and interest cost components using a single weighted-average discount rate derived from the yield curves used to measure the benefit obligation. Beginning in fiscal 2017, the Company will change its method used to estimate the service and interest cost components of net periodic benefit cost for defined benefit plans that use the yield curve approach, which represent substantially all of defined benefit plans. The Company has elected to use a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The Company will make this change to improve the correlation between projected benefit cash flows and the corresponding yield curve spot rates and to provide a more precise measurement of service and interest costs. The Company will account for this change as a change in estimate that is inseparable from a change in accounting principle and will account for it prospectively beginning in fiscal 2017. Funded Status The funded status of the plans was as follows:
| As of October 31,
| 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015
| U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans |  | Post-Retirement Benefit Plans
| In millions
Change in fair value of plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value—beginning of year | $ | — |  |  | $ | — |  |  | $ | 16,624 |  |  | $ | 5,098 |  |  | $ | 40 |  |  | $ | — |
Transfer from former Parent(1) | — |  |  | — |  |  | — |  |  | 11,667 |  |  | — |  |  | 40 |
Acquisition/divestiture/addition/deletion of plans(2) | — |  |  | — |  |  | 138 |  |  | (4 | ) |  | — |  |  | — |
Actual return on plan assets | — |  |  | — |  |  | 2,104 |  |  | 512 |  |  | 1 |  |  | — |
Employer contributions | — |  |  | 21 |  |  | 328 |  |  | 132 |  |  | 3 |  |  | 1 |
Participant contributions | — |  |  | — |  |  | 41 |  |  | 7 |  |  | 6 |  |  | — |
Benefits paid | — |  |  | (21 | ) |  | (518 | ) |  | (273 | ) |  | (3 | ) |  | (1 | )
Settlement | — |  |  | — |  |  | (33 | ) |  | (8 | ) |  | — |  |  | — |
Currency impact | — |  |  | — |  |  | (2,022 | ) |  | (507 | ) |  | — |  |  | — |
Fair value—end of year | — |  |  | — |  |  | 16,662 |  |  | 16,624 |  |  | 47 |  |  | 40 |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation—beginning of year | 7 |  |  | 370 |  |  | 19,439 |  |  | 7,335 |  |  | 139 |  |  | — |
Merged into former Parent's Shared plan(3) | — |  |  | (365 | ) |  | — |  |  | — |  |  | — |  |  | — |
Transfer from former Parent(1) | — |  |  | 7 |  |  | — |  |  | 12,262 |  |  | — |  |  | 150 |
Acquisition/divestiture/addition/deletion of plans(2) | — |  |  | — |  |  | (20 | ) |  | (3 | ) |  | — |  |  | — |
Service cost | — |  |  | — |  |  | 254 |  |  | 121 |  |  | 3 |  |  | — |
Interest cost | — |  |  | 16 |  |  | 549 |  |  | 337 |  |  | 6 |  |  | 1 |
Participant contributions | — |  |  | — |  |  | 41 |  |  | 7 |  |  | 6 |  |  | — |
Actuarial loss (gain) | — |  |  | — |  |  | 3,018 |  |  | 409 |  |  | 6 |  |  | (10 | )
Benefits paid | — |  |  | (21 | ) |  | (518 | ) |  | (273 | ) |  | (3 | ) |  | (1 | )
Plan amendments | — |  |  | — |  |  | 1 |  |  | (82 | ) |  | — |  |  | — |
Curtailment | — |  |  | — |  |  | (18 | ) |  | — |  |  | — |  |  | — |
Settlement | — |  |  | — |  |  | (33 | ) |  | (8 | ) |  | — |  |  | — |
Special termination benefits | — |  |  | — |  |  | 25 |  |  | 18 |  |  | — |  |  | — |
Currency impact | — |  |  | — |  |  | (2,374 | ) |  | (684 | ) |  | 1 |  |  | (1 | )
Projected benefit obligation—end of year | 7 |  |  | 7 |  |  | 20,364 |  |  | 19,439 |  |  | 158 |  |  | 139 |
Funded status at end of year | $ | (7 | ) |  | $ | (7 | ) |  | $ | (3,702 | ) |  | $ | (2,815 | ) |  | $ | (111 | ) |  | $ | (99 | )
Accumulated benefit obligation | $ | 7 |  |  | $ | 7 |  |  | $ | 19,829 |  |  | $ | 18,706 |  |  | $ | — |  |  | $ | — |
_______________________________________________________________________________
(1) | In fiscal 2015, in connection with the Separation, former Parent transferred plan assets and liabilities from former Parent's shared plans to established Company plans.
(2) | Primarily attributable to a business divestiture of outsourcing services in Germany and a Netherlands plan data review that transferred HPI retirees to HPE.
(3) | In October 2015, the Company transferred three unfunded non-qualified U.S. defined benefit plans to HPI.
The weighted-average assumptions used to calculate the projected benefit obligations were as follows:
| For the fiscal years ended October 31,
| 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015
| U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans |  | Post-Retirement Benefit Plans
Discount rate | 3.2 | % |  | 3.8 | % |  | 2.0 | % |  | 3.0 | % |  | 4.2 | % |  | 4.6 | %
Expected increase in compensation levels | 2.0 | % |  | 2.0 | % |  | 2.4 | % |  | 2.5 | % |  | — |  |  | — |
The net amounts recognized for defined benefit and post-retirement benefit plans in the Company's Consolidated Balance Sheets were as follows:
| As of October 31,
| 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015
| U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans |  | Post-Retirement Benefit Plans
| In millions
Noncurrent assets | $ | — |  |  | $ | — |  |  | $ | 378 |  |  | $ | 495 |  |  | $ | — |  |  | $ | — |
Current liabilities | (2 | ) |  | (2 | ) |  | (43 | ) |  | (38 | ) |  | (3 | ) |  | (3 | )
Noncurrent liabilities | (5 | ) |  | (5 | ) |  | (4,037 | ) |  | (3,272 | ) |  | (108 | ) |  | (96 | )
Funded status at end of year | $ | (7 | ) |  | $ | (7 | ) |  | $ | (3,702 | ) |  | $ | (2,815 | ) |  | $ | (111 | ) |  | $ | (99 | )
The following table summarizes the pre-tax net actuarial loss and prior service benefit recognized in Accumulated other comprehensive loss for the defined benefit plans:
| As of October 31, 2016
| U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans |  | Post-Retirement Benefit Plans
| In millions
Net actuarial loss (gain) | $ | — |  |  | $ | 5,800 |  |  | $ | (9 | )
Prior service benefit | — |  |  | (184 | ) |  | — |
Total recognized in accumulated other comprehensive loss | $ | — |  |  | $ | 5,616 |  |  | $ | (9 | )
The following table summarizes the net actuarial loss and prior service benefit for plans that are expected to be amortized from Accumulated other comprehensive loss and recognized as components of net periodic benefit cost (credit) during the next fiscal year.
| As of October 31, 2016
| U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans |  | Post-Retirement Benefit Plans
| In millions
Net actuarial loss (gain) | $ | — |  |  | $ | 446 |  |  | $ | (3 | )
Prior service benefit | — |  |  | (24 | ) |  | — |
Total expected to be recognized in net periodic benefit cost (credit) | $ | — |  |  | $ | 422 |  |  | $ | (3 | )
Defined benefit plans with projected benefit obligations exceeding the fair value of plan assets were as follows:
| As of October 31,
| 2016 |  | 2015 |  | 2016 |  | 2015
| U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans
| In millions
Aggregate fair value of plan assets | $ | — |  |  | $ | — |  |  | $ | 10,508 |  |  | $ | 8,510 |
Aggregate projected benefit obligation | $ | 7 |  |  | $ | 7 |  |  | $ | 14,587 |  |  | $ | 11,820 |
Defined benefit plans with accumulated benefit obligations exceeding the fair value of plan assets were as follows:
| As of October 31,
| 2016 |  | 2015 |  | 2016 |  | 2015
| U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans
| In millions
Aggregate fair value of plan assets | $ | — |  |  | $ | — |  |  | $ | 10,171 |  |  | $ | 8,449 |
Aggregate accumulated benefit obligation | $ | 7 |  |  | $ | 7 |  |  | $ | 13,765 |  |  | $ | 11,195 |
Fair Value of Plan Assets The Company pays the U.S. defined benefit plan obligations when they come due since these plans are unfunded. The table below sets forth the fair value of non-U.S defined benefit plan assets by asset category within the fair value hierarchy as of October 31, 2016 and 2015.
| As of October 31, 2016 |  | As of October 31, 2015
| Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
| In millions
Asset Category: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. | $ | 706 |  |  | $ | 34 |  |  | $ | — |  |  | $ | 740 |  |  | $ | 772 |  |  | $ | 65 |  |  | — |  |  | $ | 837 |
Non-U.S. | 1,022 |  |  | 227 |  |  | 84 |  |  | 1,333 |  |  | 1,910 |  |  | 408 |  |  | 68 |  |  | 2,386 |
Debt securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate | — |  |  | 2,558 |  |  | — |  |  | 2,558 |  |  | — |  |  | 2,646 |  |  | — |  |  | 2,646 |
Government(1) | — |  |  | 805 |  |  | — |  |  | 805 |  |  | — |  |  | 843 |  |  | — |  |  | 843 |
Alternative investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Private Equity(2) | — |  |  | 4 |  |  | 68 |  |  | 72 |  |  | — |  |  | 1 |  |  | 68 |  |  | 69 |
Hybrids(3) | — |  |  | 458 |  |  | — |  |  | 458 |  |  | — |  |  | 2,576 |  |  | — |  |  | 2,576 |
Hybrids at NAV(4) |  |  |  |  |  |  |  |  |  | 2,851 |  |  |  |  |  |  |  |  |  |  |  | 343 |
Hedge Funds(5) | — |  |  | 148 |  |  | 87 |  |  | 235 |  |  | 11 |  |  | 73 |  |  | 236 |  |  | 320 |
Common Contractual Funds at NAV(6) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equities at NAV |  |  |  |  |  |  |  |  |  | 3,125 |  |  |  |  |  |  |  |  |  |  |  | 2,821 |
Fixed Income at NAV |  |  |  |  |  |  |  |  |  | 948 |  |  |  |  |  |  |  |  |  |  |  | 993 |
Emerging Markets at NAV |  |  |  |  |  |  |  |  |  | 955 |  |  |  |  |  |  |  |  |  |  |  | 844 |
Alternative investments at NAV |  |  |  |  |  |  |  |  |  | 367 |  |  |  |  |  |  |  |  |  |  |  | 297 |
Real Estate Funds | 215 |  |  | 269 |  |  | 307 |  |  | 791 |  |  | 447 |  |  | 33 |  |  | 571 |  |  | 1,051 |
Insurance Group Annuity Contracts | — |  |  | 38 |  |  | 63 |  |  | 101 |  |  | — |  |  | 48 |  |  | 69 |  |  | 117 |
Cash and Cash Equivalents(7) | 1,061 |  |  | — |  |  | — |  |  | 1,061 |  |  | 372 |  |  | — |  |  | — |  |  | 372 |
Other(8) | 71 |  |  | 69 |  |  | 122 |  |  | 262 |  |  | 61 |  |  | 13 |  |  | 35 |  |  | 109 |
Total | $ | 3,075 |  |  | $ | 4,610 |  |  | $ | 731 |  |  | $ | 16,662 |  |  | $ | 3,573 |  |  | $ | 6,706 |  |  | $ | 1,047 |  |  | $ | 16,624 |
_______________________________________________________________________________
(1) | Includes debt issued by national, state and local governments and agencies.
(2) | Includes limited partnerships such as equity, buyout, venture capital, real estate, and other similar funds that invest in the U.S. and internationally where foreign currencies are hedged.
(3) | Includes a fund that invests in both private and public equities primarily in the U.S. and the United Kingdom, as well as emerging markets across all sectors. The fund also holds fixed income and derivative instruments to hedge interest rate and inflation risk. In addition, the fund includes units in transferable securities, collective investment schemes, money market funds, cash, and deposits.
(4) | Includes pooled funds that invest:
a. | in government bonds and derivative instruments such as interest rate swaps, future contracts and repurchase agreements with the objective to provide nominal and/or inflation-linked returns ($2,478 million and $0 million at October 31, 2016 and 2015, respectively);
b. | in various worldwide equity index funds with the objective to provide returns that are consistent with the FTSE All World Developed Index ($373 million and $343 million at October 31, 2016 and 2015, respectively).
While the funds are not publicly traded, the custodian strikes a net asset value at least monthly. There are no redemption restrictions or future commitments on these investments.
(5) | Includes limited partnerships that invest both long and short primarily in common stocks and credit, relative value, event driven equity, distressed debt and macro strategies. Management of the hedge funds has the ability to shift investments from value to growth strategies, from small to large capitalization stocks and bonds, and from a net long position to a net short position.
(6) | HP Invest Common Contractual Fund (CCF) is an investment arrangement in which institutional investors pool their assets. Units may be acquired in six different sub-funds focused on equities, fixed income, alternative investments, and emerging markets. Each sub-fund is invested in accordance with the fund’s investment objective and units are issued in relation to each sub-fund. While the sub-funds are not publicly traded, the custodian strikes a net asset value either once or twice a month, depending on the sub-fund. There are no redemption restrictions or future commitments on these investments.
(7) | Includes cash and cash equivalents such as short-term marketable securities.
(8) | Includes international insured contracts, derivative instruments and unsettled transactions.
Post-retirement benefit plan assets of $47 million and $40 million as of October 31, 2016 and 2015, respectively, were invested in publicly traded registered investment entities and were classified within Level 1 of the fair value hierarchy. Changes in fair value measurements of Level 3 investments for the non-U.S. defined benefit plans were as follows:
| Fiscal year ended October 31, 2016
|  |  | Alternative Investments |  |  |  |  |  |  |  |
| Equity Securities Non-U.S. |  | Private Equity |  | Hedge Funds |  | Real Estate Funds |  | Insurance Group Annuities |  | Other |  | Total
| In millions
Balance at beginning of year | $ | 68 |  |  | $ | 68 |  |  | $ | 236 |  |  | $ | 571 |  |  | $ | 69 |  |  | $ | 35 |  |  | $ | 1,047 |
Actual return on plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Relating to assets held at the reporting date | 16 |  |  | (1 | ) |  | (35 | ) |  | (96 | ) |  | (2 | ) |  | (1 | ) |  | (119 | )
Relating to assets sold during the period | — |  |  | 4 |  |  | — |  |  | — |  |  | (3 | ) |  | — |  |  | 1 |
Purchases, sales, and settlements | — |  |  | (3 | ) |  | (11 | ) |  | 2 |  |  | (3 | ) |  | 82 |  |  | 67 |
Transfers in and/or out of Level 3 | — |  |  | — |  |  | (103 | ) |  | (170 | ) |  | 2 |  |  | 6 |  |  | (265 | )
Balance at end of year | $ | 84 |  |  | $ | 68 |  |  | $ | 87 |  |  | $ | 307 |  |  | $ | 63 |  |  | $ | 122 |  |  | $ | 731 |
| Fiscal year ended October 31, 2015
|  |  | Alternative Investments |  |  |  |  |  |  |  |
| Equity Securities Non-U.S. |  | Private Equity |  | Hedge Funds |  | Real Estate Funds |  | Insurance Group Annuities |  | Other |  | Total
| In millions
Balance at beginning of year | $ | — |  |  | $ | 28 |  |  | $ | — |  |  | $ | 336 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 369 |
Transfer from former Parent(1) | 81 |  |  | 19 |  |  | 192 |  |  | 23 |  |  | 58 |  |  | 34 |  |  | 407 |
Actual return on plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Relating to assets held at the reporting date | (13 | ) |  | (1 | ) |  | 7 |  |  | 23 |  |  | 4 |  |  | 1 |  |  | 21 |
Relating to assets sold during the period | — |  |  | 5 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5 |
Purchases, sales, and settlements | — |  |  | 10 |  |  | 36 |  |  | 15 |  |  | — |  |  | — |  |  | 61 |
Transfers in and/or out of Level 3 | — |  |  | 7 |  |  | 1 |  |  | 174 |  |  | 2 |  |  | — |  |  | 184 |
Balance at end of year | $ | 68 |  |  | $ | 68 |  |  | $ | 236 |  |  | $ | 571 |  |  | $ | 69 |  |  | $ | 35 |  |  | $ | 1,047 |
______________________________________________________________________________
(1) | In connection with the Separation, former Parent transferred plan assets from former Parent's shared plans to established Company plans.
During the period ended October 31, 2016, the Company adopted the amendment to the existing accounting standards for fair value measurements issued by the FASB in May 2015, and elected to apply it on a retrospective basis. This ASU removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share as a practical expedient. See Note 1, "Overview and Basis of Presentation", for more details. The following is a description of the valuation methodologies used to measure plan assets at fair value. Investments in publicly traded equity securities are valued using the closing price on the measurement date as reported on the stock exchange on which the individual securities are traded. For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions. For corporate and government debt securities traded on active exchanges, fair value is based on observable quoted prices. The valuation of alternative investments, such as limited partnerships and joint ventures, may require significant management judgment. For alternative investments, valuation is based on fair value as reported by the asset manager and adjusted for cash flows, if necessary. In making such an assessment, a variety of factors are reviewed by management, including, but not limited to, the timeliness of fair value as reported by the asset manager and changes in general economic and market conditions subsequent to the last fair value reported by the asset manager. Depending on the amount of management judgment, the lack of near-term liquidity, and the absence of quoted market prices, these assets are classified in Level 2 or Level 3 of the fair value hierarchy. Further, depending on how quickly the Company can redeem its hedge fund investments, and the extent of any adjustments to fair value, hedge funds are classified in either Level 2 or Level 3 of the fair value hierarchy. The valuation for some of these assets requires judgment due to the absence of quoted market prices, and these assets are generally classified in either Level 2 or Level 3 of the fair value hierarchy. Cash and cash equivalents includes money market funds, which are valued based on cost, which approximates fair value. Other assets, including insurance group annuity contracts, were classified in the fair value hierarchy based on the lowest level input (e.g., quoted prices and observable inputs) that is significant to the fair value measure in its entirety. Plan Asset Allocations The weighted-average target and actual asset allocations across the benefit plans at the respective measurement dates for the non-U.S. defined benefit plans and post-retirement benefit plan were as follows:
| Non-U.S. Defined Benefit Plans |  | Post-Retirement Benefit Plans
|  |  | Plan Assets |  |  |  | Plan Assets
Asset Category | 2016 Target Allocation |  | 2016 |  | 2015 |  | 2016 Target Allocation |  | 2016 |  | 2015
Public equity securities |  |  |  | 38.3 | % |  | 43.4 | % |  |  |  |  | — |  |  | — |
Private/other equity securities |  |  |  | 22.5 | % |  | 19.8 | % |  |  |  |  | — |  |  | — |
Real estate and other |  |  |  | 6.3 | % |  | 7.0 | % |  |  |  |  | — |  |  | — |
Equity-related investments | 64.7 | % |  | 67.1 | % |  | 70.2 | % |  | — |  |  | — |  |  | — |
Debt securities | 34.5 | % |  | 26.5 | % |  | 27.6 | % |  | 90.0 | % |  | 90.2 | % |  | 97.2 | %
Cash and cash equivalents | 0.8 | % |  | 6.4 | % |  | 2.2 | % |  | 10.0 | % |  | 9.8 | % |  | 2.8 | %
Total | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | %
Investment Policy The Company's investment strategy is to seek a competitive rate of return relative to an appropriate level of risk depending on the funded status of each plan and the timing of expected benefit payments. The majority of the plans' investment managers employ active investment management strategies with the goal of outperforming the broad markets in which they invest. Risk management practices include diversification across asset classes and investment styles and periodic rebalancing toward asset allocation targets. A number of the plans' investment managers are authorized to utilize derivatives for investment or liability exposures, and the Company may utilize derivatives to effect asset allocation changes or to hedge certain investment or liability exposures. Outside the U.S., asset allocation decisions are typically made by an independent board of trustees for the specific plan. Investment objectives are designed to generate returns that will enable the plan to meet its future obligations. In some countries, local regulations may restrict asset allocations, typically leading to a higher percentage of investment in fixed income securities than would otherwise be deployed. The Company reviews the investment strategy and provides a recommended list of investment managers for each country plan, with final decisions on asset allocation and investment managers made by the board of trustees for the specific plan. 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 the Company'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 2017, the Company expects to contribute approximately $348 million to its non-U.S. pension plans. In addition, the Company expects to contribute approximately $2 million to cover benefit payments to U.S. non-qualified plan participants. The Company expects to pay approximately $3 million to cover benefit claims for its post-retirement benefit plans. These amounts do not include pension funding the Company is obligated to make related to the spin-off and merger of the Enterprise Services business with CSC. The Company'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. In connection with the Company’s plan for a tax-free spin-off and merger of its Enterprise Services business with CSC, there will be a transfer of unfunded pension liabilities for certain pension plans to the Company’s Enterprise Services business. As of October 31, 2016, the transfer is targeted to be completed on or around April 1, 2017. The approximate net pension liability to be transferred is pursuant to the transaction agreements, wherein the Company is obligated to fund the transferred net pension liability in excess of $570 million. The Company currently estimates the total funding amount to be in the range of $2.0 billion to $3.0 billion. While the exact amount will not be known until the transaction completion date, in December 2016 the Company made initial funding payments of $1.9 billion. Estimated Future Benefits Payments As of October 31, 2016, estimated future benefits payments for the Company's retirement plans were as follows:
Fiscal year | U.S. Defined Benefit Plans |  | Non-U.S. Defined Benefit Plans |  | Post-Retirement Benefit Plans
| In millions
2017 | $ | 2 |  |  | $ | 527 |  |  | $ | 4 |
2018 | — |  |  | 505 |  |  | 5 |
2019 | 1 |  |  | 542 |  |  | 6 |
2020 | — |  |  | 579 |  |  | 7 |
2021 | 1 |  |  | 608 |  |  | 8 |
Next five fiscal years to October 31, 2026 | 2 |  |  | 3,515 |  |  | 54 |

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