Wells Fargo 2010 Annual Report Download - page 203

Pension and Postretirement Plans
Note 19: Employee Benefits and Other Expenses
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; the benefits earned under the Cash Balance Plan
were frozen effective July 1, 2009.
On April 28, 2009, the Board of Directors approved
amendments to freeze the benefits earned under the Wells Fargo
qualified and supplemental Cash Balance Plans and the
Wachovia Corporation Pension Plan, a cash balance plan that
covered eligible employees of the legacy Wachovia Corporation,
and to merge the Wachovia Pension Plan into the qualified Cash
Balance Plan. These actions became effective on 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 qualifying compensation. The compensation
credit percentage was based on age and years of credited service.
The freeze discontinues the allocation of compensation credit for
services after June 30, 2009. Investment credits continue to be
allocated to participants based on their accumulated balances.
Employees become vested in their Cash Balance Plan accounts
after completing three years of vesting service.
Freezing and merging the above plans effective July 1, 2009,
resulted in a re-measurement of the pension obligations and
plan assets as of April 30, 2009. Freezing and re-measuring
decreased the pension obligations by approximately
$945 million and decreased a cumulative loss in OCI by
approximately $725 million pre tax ($456 million after tax) in
second quarter 2009. The re-measurement resulted in a
decrease in the fair value of plan assets of approximately
$150 million. We used a discount rate of 7.75% for the
April 30, 2009, re-measurement based on our consistent
methodology of determining our discount rate based on an
established yield curve developed by our outside actuarial firm.
This methodology incorporates a broad group of top quartile Aa
or higher rated bonds.
As a result of freezing our pension plans, we revised our
amortization life for actuarial gains and losses from 5 years to 13
years to reflect the estimated average remaining participation
period.
These actions lowered pension cost by approximately
$500 million for 2009, including $67 million of one-time
curtailment gains.
We did not make a contribution to our Cash Balance Plan in
2010. We do not expect that we will be required to make a
contribution to the Cash Balance Plan in 2011; however, this is
dependent on the finalization of the actuarial valuation. Our
decision of whether to make a contribution in 2011 will be based
on various factors including the actual investment performance
of plan assets during 2011. Given these uncertainties, we cannot
estimate at this time the amount, if any, that we will contribute
in 2011 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.
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