Wells Fargo 2005 Annual Report Download - page 90

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88
(in millions) Year ended December 31,
2005 2004
Pension benefits Pension benefits
Non- Other Non- Other
Qualified qualified benefits Qualified qualified benefits
Fair value of plan assets at beginning of year $4,457 $ — $329 $3,690 $ — $272
Actual return on plan assets 400 — 34 450 — 27
Employer contribution 327 13 56 555 25 74
Plan participants’ contributions ——29 ——26
Benefits paid (242) (13) (78) (240) (25) (70)
Foreign exchange impact 2——2 — —
Fair value of plan assets at end of year $4,944 $ — $370 $4,457 $ — $329
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. We target the
Cash Balance Plan’s asset allocation for a target mix range
of 40–70% equities, 20–50% fixed income, and approximately
10% in real estate, venture capital, private equity and other
investments. The target ranges employ a Tactical Asset
Allocation overlay, which is designed to overweight stocks
or bonds when a compelling opportunity exists. The Employee
Benefit Review Committee (EBRC), which includes several
members of senior management, formally reviews the
investment risk and performance of the Cash Balance Plan
on a quarterly basis. Annual Plan liability analysis and
periodic asset/liability evaluations are also conducted.
The weighted-average assumptions used to determine the
projected benefit obligation were:
Year ended December 31,
2005 2004
Pension Other Pension Other
benefits(1) benefits benefits(1) benefits
Discount rate 5.75% 5.75% 6.0%6.0%
Rate of compensation increase 4.0 — 4.0 —
The accumulated benefit obligation for the defined benefit
pension plans was $4,076 million and $3,786 million at
December 31, 2005 and 2004, respectively.
(in millions) December 31,
2005 2004
Pension benefits Pension benefits
Non- Other Non- Other
Qualified qualified benefits Qualified qualified benefits
Projected benefit obligation at beginning of year $3,777 $228 $751 $3,387 $202 $698
Service cost 208 21 21 170 23 17
Interest cost 220 14 41 215 13 43
Plan participants’ contributions ——29 ——26
Amendments 37 — (44) (54) (12) (1)
Actuarial gain (loss) 43 27 (12) 296 27 37
Benefits paid (242) (13) (78) (240) (25) (70)
Foreign exchange impact 2 — 1 3 — 1
Projected benefit obligation at end of year $4,045 $277 $709 $3,777 $228 $751
The changes in the projected benefit obligation during 2005 and 2004 and the amounts included in the Consolidated Balance
Sheet at December 31, 2005 and 2004, were:
(1) Includes both qualified and nonqualified pension benefits.
The changes in the fair value of plan assets during 2005 and 2004 were: