Employee Benefits and Other Expenses

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

Employee Benefits and Other Expenses

Note 18: Employee Benefits and Other Expenses

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. For additional information on our pension and postretirement plans, including plan assumptions, investment strategy and asset allocation, projected benefit payments, and valuation methodologies used for assets measured at fair value, see Note 1 (Summary of Significant Accounting Policies) and Note 21 (Employee Benefits and Other Expenses) in our 2021 Form 10-K.

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 $47 million were recognized during first quarter 2022, 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 lump sum benefit payments during first quarter 2022. There were no settlement losses recognized during first quarter 2021. As a result of the settlement losses, we remeasured the Cash Balance Plan obligation and plan assets as of March 31, 2022, and used a discount rate of 3.65%. In first quarter 2022, the result of the settlement losses and remeasurement was:

•an increase of $10 million in the Cash Balance Plan asset; and

•an increase of $57 million in other comprehensive income (pre-tax).

Table 18.1 presents the components of net periodic benefit cost. The expected long-term rate of return on plan assets and interest cost discount rate in determining net periodic benefit cost for first quarter 2022 were 5.00% and 2.47%, respectively. 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 18.1: Net Periodic Benefit Cost

	2022				2021
	Pension benefits				Pension benefits
(in millions)	Qualified		Non-  qualified	Other  benefits	Qualified	Non-  qualified	Other  benefits
Quarter ended March 31,
Service cost	$	5	—	—	4	—	—
Interest cost	67		2	2	71	3	3
Expected return on plan assets	(139)		—	(5)	(152)	—	(5)
Amortization of net actuarial loss (gain)	33		3	(5)	37	4	(5)
Amortization of prior service credit	—		—	(3)	—	—	(2)
Settlement loss	47		1	—	—	2	—
Net periodic benefit cost	$	13	6	(11)	(40)	9	(9)

Other Expenses

Regulatory Charges and Assessments expense, which is included in other noninterest expense, was $225 million in first quarter 2022, compared with $217 million in the same period a year ago, and primarily consisted of Federal Deposit Insurance Corporation (FDIC) deposit assessment expense.