Pension and Postretirement Plans

We sponsor a frozen noncontributory qualified defined benefit retirement plan, 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’ accounts based on their accumulated balances.

We voluntarily made contributions of $700 million to our Cash Balance Plan in 2020. We do not expect that we will be required to make a contribution to the Cash Balance Plan in 2021. For the nonqualified pension plans and postretirement benefit plans, there is no minimum required contribution beyond the amount needed to fund benefit payments.

We recognize settlement losses for our Cash Balance Plan based on an assessment of whether lump sum benefit payments will, in aggregate for the year, exceed the sum of its annual service and interest cost (threshold). Settlement losses of $121 million and $134 million were recognized during 2020 and 2018, respectively, representing the pro rata portion of the net loss in cumulative other comprehensive income based on the percentage reduction in the Cash Balance Plan’s projected benefit obligation attributable to 2020 and 2018 lump sum payments (included in the “Benefits paid” line in Table 21.1). Settlement losses were not recognized in 2019 as lump sum payments did not exceed the 2019 threshold.

Our nonqualified defined benefit plans are unfunded and provide supplemental defined benefit pension benefits to certain eligible employees. The benefits under these plans were frozen in prior years.

We provide health care and life insurance benefits for certain retired employees, and we reserve the right to amend, modify or terminate 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.

Table 21.1 presents the changes in the benefit obligation and the fair value of plan assets, the funded status, and the

amounts recognized on the consolidated balance sheet. At both December 31, 2020 and 2019, changes in the benefit obligation for the qualified plans were primarily driven by the changes in the actuarial losses due to a decrease in the discount rates.

Table 21.1: Changes in Benefit Obligation and Fair Value of Plan Assets


	December 31, 2020				December 31, 2019
	Pension benefits				Pension benefits
(in millions)	Qualified		Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits
Change in benefit obligation:
Benefit obligation at beginning of year	$	11,116	572	525	10,129	557	555
Service cost	14		—	—	11	—	—
Interest cost	325		16	16	419	22	23
Plan participants’ contributions	—		—	43	—	—	44
Actuarial loss (gain)	1,205		25	(15)	1,229	49	(11)
Benefits paid	(706)		(57)	(78)	(672)	(57)	(86)

Settlements, Curtailments, and Amendments	(1)		—	—	(2)	—	—



Foreign exchange impact	3		—	—	2	1	—
Benefit obligation at end of year	11,956		556	491	11,116	572	525

Change in plan assets:
Fair value of plan assets at beginning of year	10,763		—	540	9,477	—	511
Actual return on plan assets	1,291		—	38	1,758	—	64
Employer contribution	712		57	6	199	57	7
Plan participants’ contributions	—		—	43	—	—	44
Benefits paid	(706)		(57)	(78)	(672)	(57)	(86)

Settlement	(1)		—	—	(1)	—	—

Foreign exchange impact	2		—	—	2	—	—
Fair value of plan assets at end of year	12,061		—	549	10,763	—	540
Funded status at end of year	$	105	(556)	58	(353)	(572)	15
Amounts recognized on the consolidated balance sheet at end of year:
Assets	$	181	—	84	1	—	44
Liabilities	(76)		(556)	(26)	(354)	(572)	(29)

Table 21.2 provides information for pension and post retirement plans with benefit obligations in excess of plan assets.

Table 21.2: Plans with Benefit Obligations in Excess of Plan Assets


	December 31, 2020			December 31, 2019
(in millions)	Pension Benefits		Other Benefits	Pension Benefits	Other Benefits
Projected benefit obligation	$	715	N/A	11,653	N/A
Accumulated benefit obligation	684		26	11,634	29
Fair value of plan assets	82		—	10,727	—

Table 21.3 presents the components of net periodic benefit cost and other comprehensive income (OCI). Service cost is reported in personnel expense and all other components of net

periodic benefit cost are reported in other noninterest expense on the consolidated statement of income.

Table 21.3: Net Periodic Benefit Cost and Other Comprehensive Income


	December 31, 2020				December 31, 2019			December 31, 2018
	Pension benefits				Pension benefits			Pension benefits
(in millions)	Qualified		Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits
Service cost	$	14	—	—	11	—	—	11	—	—
Interest cost	325		16	16	419	22	23	392	21	21
Expected return on plan assets	(603)		—	(21)	(567)	—	(28)	(641)	—	(31)
Amortization of net actuarial loss (gain)	157		14	(19)	148	10	(17)	131	14	(18)
Amortization of prior service credit	—		—	(10)	—	—	(10)	—	—	(10)
Settlement loss	121		3	—	—	2	—	134	2	—
Net periodic benefit cost	14		33	(34)	11	34	(32)	27	37	(38)
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)	517		25	(32)	38	49	(47)	445	(27)	15
Amortization of net actuarial gain (loss)	(157)		(14)	19	(148)	(10)	17	(131)	(14)	18
Prior service cost	—		—	—	—	—	—	1	—	—
Amortization of prior service credit	—		—	10	—	—	10	—	—	10
Settlement	(121)		(3)	—	—	(2)	—	(134)	(2)	—
Total recognized in other comprehensive income	239		8	(3)	(110)	37	(20)	181	(43)	43
Total recognized in net periodic benefit cost and other comprehensive income	$	253	41	(37)	(99)	71	(52)	208	(6)	5

Table 21.4 provides the amounts recognized in cumulative OCI (pre-tax).

Table 21.4: Benefits Recognized in Cumulative OCI


	December 31, 2020				December 31, 2019
	Pension benefits				Pension benefits
(in millions)	Qualified		Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits
Net actuarial loss (gain)	$	3,465	194	(370)	3,226	186	(357)
Net prior service cost (credit)	1		—	(136)	1	—	(146)
Total	$	3,466	194	(506)	3,227	186	(503)

Plan Assumptions

For additional information on our pension accounting assumptions, see Note 1 (Summary of Significant Accounting Policies). Table 21.5 presents the weighted-average assumptions used to estimate the projected benefit obligation.

Table 21.5: Weighted-Average Assumptions Used to Estimate Projected Benefit Obligation


	December 31, 2020				December 31, 2019
	Pension benefits				Pension benefits
	Qualified		Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits
Discount rate	2.46	%	2.15	2.31	3.21	3.03	3.10
Interest crediting rate	2.66		0.87	N/A	2.70	1.35	N/A

Table 21.6 presents the weighted-average assumptions used to determine the net periodic benefit cost.

Table 21.6: Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost


	December 31, 2020				December 31, 2019			December 31, 2018
	Pension benefits				Pension benefits			Pension benefits
	Qualified		Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits
Discount rate (1)	2.95	%	3.12	3.10	4.30	4.10	4.24	3.65	3.65	3.54
Interest crediting rate (1)	2.68		1.46	N/A	3.22	2.05	N/A	2.74	1.68	N/A
Expected return on plan assets	5.74		N/A	4.00	6.24	N/A	5.75	6.24	N/A	5.75

(1)Includes the impact of interim re-measurements as applicable.

To account for postretirement health care plans, we used health care cost trend rates to recognize the effect of expected changes in future health care costs due to medical inflation, utilization changes, new technology, regulatory requirements and Medicare cost shifting. In determining the end of year benefit obligation, we assumed an average annual increase of approximately 7.80% for health care costs in 2021. This rate is assumed to trend down 0.30%-0.40% per year until the trend rate reaches an ultimate rate of 4.50% in 2030. The 2020 periodic benefit cost was determined using an initial annual trend rate of 8.30%. This rate was assumed to decrease 0.40%-0.50% per year until the trend rate reached an ultimate rate of 4.50% in 2028.

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 a moderate amount of long-term growth opportunities while ensuring that risk is mitigated through diversification across numerous asset classes and various investment strategies, coupled with an investment strategy for the fixed income assets that is generally designed to approximate the interest rate sensitivity of the Cash Balance Plan’s benefit obligations. The Cash Balance Plan currently has a target asset allocation mix comprised of the following ranges: 65%-75% fixed income, 20%-30% equities, and 5%-10% in real estate, 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 predominately invested in fixed income securities and cash. 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 Table 21.7.

Table 21.7: Projected Benefit Payments


	Pension benefits
(in millions)	Qualified		Non- qualified	Other benefits
Year ended December 31,
2021	$	763	47	39
2022	806		45	38
2023	732		43	36
2024	710		42	35
2025	716		40	34
2026-2030	3,397		173	146

Fair Value of Plan Assets

Table 21.8 presents the classification of the fair value of the pension plan and other benefit plan assets in the fair value hierarchy. See Note 17 (Fair Values of Assets and Liabilities) for a description of the fair value hierarchy.

Table 21.8: Pension and Other Benefit Plan Assets


	Carrying value at year end
	Pension plan assets						Other benefits plan assets
(in millions)	Level 1		Level 2	Level 3	Total		Level 1	Level 2	Level 3	Total
December 31, 2020
Cash and cash equivalents	$	68	154	—	222		46	145	—	191
Long duration fixed income (1)	1,032		6,092	—	7,124		—	—	—	—
Intermediate (core) fixed income (2)	—		333	—	333		—	186	—	186
High-yield fixed income	—		232	—	232		—	—	—	—
International fixed income	—		136	—	136		—	—	—	—
Domestic large-cap stocks (3)	647		242	—	889		—	74	—	74
Domestic mid-cap stocks	216		121	—	337		—	20	—	20
Domestic small-cap stocks	212		10	—	222		—	12	—	12
Global stocks (4)	—		417	—	417		—	—	—	—
International stocks (5)	260		440	1	701		12	25	—	37
Emerging market stocks	51		216	—	267		—	—	—	—
Real estate	133		44	2	179		—	—	—	—
Hedge funds/absolute return	73		77	—	150		—	—	—	—

Other	174		65	9	248		5	—	24	29
Plan investments – excluding investments at NAV	$	2,866	8,579	12	11,457		63	462	24	549
Investments at NAV (6)					572					—
Net receivables					32					—
Total plan assets					$	12,061				549
December 31, 2019
Cash and cash equivalents	$	3	287	—	290		53	145	—	198
Long duration fixed income (1)	821		5,259	—	6,080		—	—	—	—
Intermediate (core) fixed income (2)	—		167	—	167		—	177	—	177
High-yield fixed income	—		217	—	217		—	—	—	—
International fixed income	33		97	—	130		—	—	—	—
Domestic large-cap stocks (3)	700		290	—	990		—	73	—	73
Domestic mid-cap stocks	210		113	—	323		—	19	—	19
Domestic small-cap stocks	201		9	—	210		—	11	—	11
Global stocks (4)	92		374	—	466		—	—	—	—
International stocks (5)	567		120	—	687		12	22	—	34
Emerging market stocks	—		249	—	249		—	—	—	—
Real estate	141		35	7	183		—	—	—	—
Hedge funds/absolute return	68		50	—	118		—	—	—	—

Other	57		48	9	114		4	—	24	28
Plan investments – excluding investments at NAV	$	2,893	7,315	16	10,224		69	447	24	540
Investments at NAV (6)					478					—
Net receivables					61					—
Total plan assets					$	10,763				540

(1)This category includes a diversified mix of assets, which are being managed in accordance with a duration target of approximately 12 years and 10 years, for December 31, 2020 and 2019, respectively, and an emphasis on corporate credit bonds combined with investments in U.S. Treasury securities and other U.S. agency and non-agency bonds.

(2)This category includes assets that are intermediate duration, investment grade bonds held in investment strategies benchmarked to the Bloomberg Barclays Capital U.S. Aggregate Bond Index, including U.S. Treasury securities, agency and non-agency asset-backed bonds and corporate bonds.

(3)This category covers a broad range of investment styles, including active, enhanced index and passive approaches, as well as style characteristics of value, core and growth emphasized strategies. Assets in this category are currently diversified across eight unique investment strategies with no single investment manager strategy representing more than 2.0% of total plan assets.

(4)This category consists of five unique investment strategies providing exposure to broadly diversified, global equity investments with no single strategy representing more than 1.5% of total Plan assets.

(5)This category includes assets diversified across five and four unique investment strategies for December 31, 2020 and 2019, respectively, providing exposure to companies in developed market, non-U.S. countries with no single strategy representing more than 2.5% of total plan assets in both years.

(6)Consists of certain investments that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

Table 21.9 presents the changes in Level 3 pension plan and other benefit plan assets measured at fair value.

Table 21.9: Fair Value Level 3 Pension and Other Benefit Plan Assets


	Balance beginning of year		Gains (losses) (1)	Purchases, sales and settlements (net)	Transfer into/(out of) Level 3		Balance end of year
(in millions)
Year ended December 31, 2020
Pension plan assets	$	16		(1)	(4)	1		12
Other benefits plan assets	24			—	—	—		24


Year ended December 31, 2019
Pension plan assets	22			4	(10)	—		16







Other benefits plan assets	24			—	—	—		24

(1)Represents unrealized and realized gains (losses). All unrealized gains (losses) relate to instruments held at period end.

VALUATION METHODOLOGIES Following is a description of the valuation methodologies used for assets measured at fair value.

Cash and Cash Equivalents – includes investments in collective investment funds valued at fair value based upon the fund’s NAV per share held at year-end. The NAV per share is quoted on a private market that is not active; however, the NAV per share is based on underlying investments traded on an active market. This group of assets also includes investments in registered investment companies valued at the NAV per share held at year-end and in interest-bearing bank accounts.

Long Duration, Intermediate (Core), High-Yield, and International Fixed Income – includes investments traded on the secondary markets; prices are measured by using quoted market prices for similar securities, pricing models, and discounted cash flow analyses using significant inputs observable in the market where available, or a combination of multiple valuation techniques. This group of assets also includes highly liquid government securities such as U.S. Treasuries, limited partnerships valued at the NAV, registered investment companies and collective investment funds described above.

Domestic, Global, International and Emerging Market Stocks – investments in exchange-traded equity securities are valued at quoted market values. This group of assets also includes investments in registered investment companies and collective investment funds described above.

Real Estate – includes investments in real estate, which are valued at fair value based on an income capitalization valuation approach. Market values are estimates, and the actual market price of the real estate can only be determined by negotiation between independent third parties in sales transactions. This group of assets also includes investments in exchange-traded equity securities and collective investment funds described above.

Hedge Funds / Absolute Return – includes investments in registered investment companies, and limited partnerships, as described above.

Other – insurance contracts that are stated at cash surrender value. This group of assets also includes investments in registered investment companies and collective investment funds described above.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Defined Contribution Retirement Plans

We sponsor a qualified defined contribution retirement plan, the Wells Fargo & Company 401(k) Plan (401(k) Plan). Under the 401(k) Plan, after 1 month of service, eligible employees may contribute up to 50% of their certified compensation, subject to statutory limits. Eligible employees who complete one year of service are eligible for quarterly company matching contributions, which are generally dollar for dollar up to 6% of an employee’s eligible certified compensation. Matching contributions are 100% vested. The 401(k) Plan includes an employer discretionary profit sharing contribution feature to allow us to make a contribution to eligible employees’ 401(k) Plan accounts for a plan year. Eligible employees who complete one year of service are eligible for profit sharing contributions. Profit sharing contributions are vested after three years of service. Total defined contribution retirement plan expenses were $1.1 billion in both 2020, 2019 and $1.2 billion, in 2018.

Effective January 2021, we implemented the following changes to the 401(k) Plan: (1) added a new base contribution of 1% of certified compensation for employees with annual compensation of less than $75,000; (2) replaced the discretionary profit sharing contribution with a discretionary contribution for employees with annual compensation of less than $150,000; (3) revised the contribution and vesting timing, whereby the match, base and discretionary employer contributions require one year of service, vest after three years of service, and are made annually at year-end for employees who are eligible for benefits on December 15; and (4) allow participants to elect installment distributions in addition to lump sum and partial lump sum distributions.

Other Expenses

Regulatory Charges and Assessments expense, which is included in other noninterest expense, was $834 million, $723 million, and $1.1 billion in 2020, 2019 and 2018, respectively, and primarily consisted of Federal Deposit Insurance Corporation (FDIC) deposit assessment expense.