Wells Fargo 2013 Annual Report Download - page 250

Note 20: Employee Benefits and Other Expenses (continued)
Investment Strategy and Asset Allocation
We seek to achieve the expected long-term rate of return with a
prudent level of risk given the benefit obligations of the pension
plans and their funded status. Our overall investment strategy is
designed to provide our Cash Balance Plan with long-term
growth opportunities while ensuring that risk is mitigated
through diversification across numerous asset classes and
various investment strategies. We target the asset allocation for
our Cash Balance Plan at a target mix range of 30-50% equities,
40-60% fixed income, and approximately 10% in real estate,
venture capital, private equity and other investments. The
Employee Benefit Review Committee (EBRC), which includes
several members of senior management, formally reviews the
investment risk and performance of our Cash Balance Plan on a
quarterly basis. Annual Plan liability analysis and periodic
asset/liability evaluations are also conducted.
Other benefit plan assets include (1) assets held in a 401(h)
trust, which are invested with a target mix of 40-60% for both
equities and fixed income, and (2) assets held in the Retiree
Medical Plan Voluntary Employees' Beneficiary Association
(VEBA) trust, which are invested with a general target asset mix
of 20-40% equities and 60-80% fixed income. In addition, the
strategy for the VEBA trust assets considers the effect of income
taxes by utilizing a combination of variable annuity and low
turnover investment strategies. Members of the EBRC formally
review the investment risk and performance of these assets on a
quarterly basis.
Projected Benefit Payments
Future benefits that we expect to pay under the pension and
other benefit plans are presented in the following table. Other
benefits payments are expected to be reduced by prescription
drug subsidies from the federal government provided by the
Medicare Prescription Drug, Improvement and Modernization
Act of 2003.
Pension benefits Other benefits
(in millions) Qualified
Non-
qualified
Future
benefits
Subsidy
receipts
Year ended
December 31,
2014 $ 768 70 87 13
2015 743 65 89 11
2016 721 64 90 11
2017 719 58 90 11
2018 717 72 90 12
2019-2023 3,321 238 425 57
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