Wells Fargo 2013 Annual Report Download - page 247

Note 20: Employee Benefits and Other Expenses
Pension and Postretirement Plans
We sponsor a noncontributory qualified defined benefit
retirement plan, the Wells Fargo & Company Cash Balance Plan
(Cash Balance Plan), which covers eligible employees of Wells
Fargo. Benefits accrued under the Cash Balance Plan were frozen
effective July 1, 2009.
Prior to July 1, 2009, eligible employees' Cash Balance Plan
accounts were allocated a compensation credit based on a
percentage of their certified compensation. The compensation
credit percentage was based on age and years of credited service.
The freeze discontinues the allocation of compensation credits
after June 30, 2009. Investment credits continue to be allocated
to participants based on their accumulated balances.
We recognize settlement losses for our Cash Balance Plan
based on an assessment of whether our estimated lump sum
payments related to the Cash Balance Plan will, in aggregate for
the year, exceed the sum of its annual service and interest cost
(threshold); in 2013, lump sum payments exceeded this
threshold. Settlement losses of $123 million were recognized in
2013, representing the pro rata portion of the net loss remaining
in cumulative other comprehensive income based on the
percentage reduction in the Cash Balance Plan’s projected
benefit obligation. A remeasurement of the Cash Balance liability
and related plan assets occurs at the end of each quarter in
which settlement losses are recognized.
We did not make a contribution to our Cash Balance Plan in
2013. We do not expect that we will be required to make a
contribution to the Cash Balance Plan in 2014; however, this is
dependent on the finalization of the actuarial valuation in 2014.
Our decision of whether to make a contribution in 2014 will be
based on various factors including the actual investment
performance of plan assets during 2014. Given these
uncertainties, we cannot estimate at this time the amount, if any,
that we will contribute in 2014 to the Cash Balance Plan. For the
nonqualified pension plans and postretirement benefit plans,
there is no minimum required contribution beyond the amount
needed to fund benefit payments; we may contribute more to our
postretirement benefit plans dependent on various factors.
We provide health care and life insurance benefits for certain
retired employees and reserve the right to terminate, modify or
amend any of the benefits at any time.
The information set forth in the following tables is based on
current actuarial reports using the measurement date of
December 31 for our pension and postretirement benefit plans.
The changes in the benefit obligation and the fair value of
plan assets, the funded status and the amounts recognized on
the balance sheet were:
December 31,
2013 2012
Pension benefits Pension benefits
(in millions) Qualified
Non-
qualified
Other
benefits Qualified
Non-
qualified
Other
benefits
Change in benefit obligation:
Benefit obligation at beginning of year $ 11,717 719 1,293 10,634 691 1,304
Service cost --11 3 - 11
Interest cost 465 29 47 514 32 60
Plan participants’ contributions --77 -- 80
Actuarial loss (gain) (1,106) (17) (306) 1,242 62 (23)
Benefits paid (875) (62) (147) (725) (66) (147)
Medicare Part D subsidy - - 8 - - 11
Curtailment -- - -- (3)
Amendments ---1--
Liability transfer --- 47 --
Foreign exchange impact (3) - (1) 1 --
Benefit obligation at end of year 10,198 669 982 11,717 719 1,293
Change in plan assets:
Fair value of plan assets at beginning of year 9,539 -636 9,061 -640
Actual return on plan assets 743 -71 1,149 -55
Employer contribution 4 62 - 9 66 (3)
Plan participants’ contributions --77 -- 80
Benefits paid (875) (62) (147) (725) (66) (147)
Medicare Part D subsidy - - 8 - - 11
Asset transfer -- - 44 --
Foreign exchange impact (2) -- 1 --
Fair value of plan assets at end of year 9,409 -645 9,539 -636
Funded status at end of year $ (789) (669) (337) (2,178) (719) (657)
Amounts recognized on the balance sheet at end of year:
Liabilities $ (789) (669) (337) (2,178) (719) (657)
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