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For a while during the last decade, Hewlett-Packard had a fully funded pension plan that was invested almost entirely in fixed income and had hedged 100% of its interest-rate risk. Then in 2008, $125 billion HP acquired EDS. The EDS defined-benefit plan was heavily invested in equities and the financial crisis left it severely underfunded. In 2009, the company merged the HP and EDS U.S. plans, which had a combined funded status of just 82%, increased the plan’s allocation to risky assets and unwound its interest-rate hedge.

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