Wells Fargo 2006 Annual Report Download - page 98

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96
The table below provides information for pension plans
with benefit obligations in excess of plan assets, substantially
due to our nonqualified pension plans.
(in millions) December 31,
2006 2005
Projected benefit obligation $399 $359
Accumulated benefit obligation 345 297
Fair value of plan assets 70 60
The accumulated benefit obligation for the defined benefit
pension plans was $4,550 million and $4,076 million at
December 31, 2006 and 2005, respectively.
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,
2006 2005
Pension Other Pension Other
benefits(1) benefits benefits(1) benefits
Discount rate 5.75% 5.75% 5.75%5.75%
Rate of compensation increase 4.0 — 4.0 —
(1) Includes both qualified and nonqualified pension benefits.
The components of net periodic benefit cost were:
(in millions) Year ended December 31,
2006 2005 2004
Pension benefits Pension benefits Pension benefits
Non- Other Non- Other Non- Other
Qualified qualified benefits Qualified qualified benefits Qualified qualified benefits
Service cost $ 247 $16 $ 15 $ 208 $21 $ 21 $ 170 $23 $ 17
Interest cost 224 16 39 220 14 41 215 13 43
Expected return
on plan assets (421) — (31) (393) — (25) (327) — (23)
Amortization of
net actuarial loss (1) 56 6 5 68 3 6 51 1 2
Amortization of
prior service cost —(1)(4) (4) (2) (1) (1) (1) (1)
Special termination
benefits 2—— ——— — ——
Curtailment gain —— (9) ——— — ——
Settlement 5 3 — — — — (2) 2 —
Net periodic
benefit cost $ 113 $40 $ 15 $ 99 $36 $ 42 $ 106 $38 $ 38
(1) Net actuarial loss is generally amortized over five years.
The weighted-average allocation of plan assets was:
Percentage of plan assets at December 31,
2006 2005
Pension Other Pension Other
plan benefit plan benefit
assets plan assets assets plan assets
Equity securities 70% 62% 69% 58%
Debt securities 24 35 27 40
Real estate 4231
Other 2 1 1 1
Total 100% 100% 100% 100%