Wells Fargo 2015 Annual Report Download - page 248

Note 20: Employee Benefits and Other Expenses
Pension and Postretirement Plans
We sponsor a frozen noncontributory qualified defined benefit
retirement plan called the Wells Fargo & Company Cash Balance
Plan (Cash Balance Plan), which covers eligible employees of
Wells Fargo. The Cash Balance Plan was frozen on July 1, 2009
and no new benefits accrue after that date.
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 freeze
discontinued 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). Lump sum payments did not exceed this threshold
in 2015 and 2014. 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
2015. We do not expect that we will be required to make a
contribution to the Cash Balance Plan in 2016; however, this is
dependent on the finalization of the actuarial valuation in 2016.
Our decision of whether to make a contribution in 2016 will be
based on various factors including the actual investment
performance of plan assets during 2016. Given these
uncertainties, we cannot estimate at this time the amount, if any,
that we will contribute in 2016 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.
In 2015 and 2014, the Society of Actuaries (SOA) published
updated mortality tables. The benefit obligations at
December 31, 2015 and 2014, reflect the SOA's updated
mortality tables, which did not have a material effect on these
obligations.
Table 20.1 presents the changes in the benefit obligation
and the fair value of plan assets, the funded status, and the
amounts recognized on the balance sheet.
Table 20.1: Changes in Benefit Obligation and Fair Value of Plan Assets
December 31, 2015 December 31, 2014
Pension benefits Pension benefits
Non- Other Non- Other
(in millions) Qualified qualified benefits Qualified qualified benefits
Change in benefit obligation:
Benefit obligation at beginning of year $ 11,125 730 1,100 10,198 669 982
Service cost 2 — 6 1 — 7
Interest cost 429 25 42 465 27 42
Plan participants’ contributions — — 68 — — 73
Actuarial loss (gain) (196) (25) (56) 1,161 89 136
Benefits paid (676) (82) (139) (692) (54) (148)
Medicare Part D subsidy — — 9 — — 9
Curtailment — — (25) — — —
Foreign exchange impact (11) (1) (3) (8) (1) (1)
Benefit obligation at end of year 10,673 647 1,002 11,125 730 1,100
Change in plan assets:
Fair value of plan assets at beginning of year 9,626 — 624 9,409 — 645
Actual return on plan assets (112) — 2 909 — 26
Employer contribution 7 82 4 7 54 19
Plan participants’ contributions — — 68 — — 73
Benefits paid (676) (82) (139) (692) (54) (148)
Medicare Part D subsidy — — 9 — — 9
Foreign exchange impact (9) — — (7) — —
Fair value of plan assets at end of year 8,836 — 568 9,626 — 624
Funded status at end of year $ (1,837) (647) (434) (1,499) (730) (476)
Amounts recognized on the balance sheet at end of year:
Liabilities $ (1,837) (647) (434) (1,499) (730) (476)
Wells Fargo & Company
246