Wells Fargo & Company (f.k.a. Norwest Corporation) and Subsidiaries - Page 11




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          D.   Norwest’s Contributions to the Postretirement Medical Trust            
               For the years 1991-94, Norwest made contributions to the               
          postretirement medical trust for the purpose of providing                   
          postretirement medical benefits.                                            
               1.   Funding the Postretirement Medical Trust for 1991                 
               During the years at issue, William M. Mercer, Inc.                     
          (hereinafter referred to as Mercer), a national actuarial firm,             
          prepared actuarial funding valuations for Norwest’s pension plans           
          and postretirement medical plans.  Sometime in late 1990/early              
          1991, Norwest expressed to Mercer an interest in funding its                
          retiree medical benefits plan.  Norwest understood that employers           
          were permitted a tax deduction for funding a reserve for                    
          postretirement medical benefits.                                            
               On April 14, 1992, Mercer prepared and presented to Norwest a          
          valuation report entitled “Norwest Corporation Actuarial Funding            
          Valuation of the Post-retirement Medical Plans as of January 1,             
          1991" (the 1991 valuation).  Mercer computed the present value of           
          future medical benefits to be $14,096,473 for active employees and          
          $27,759,057 for retired employees.  In determining these                    
          computations, Mercer used a pretax investment rate assumption of 9          
          percent and an after-tax investment rate of 5.5 percent.  Mercer            
          divided the $14,096,473 for active employees by the “average                
          actuarial present value of future service” for the active employees         
          (4.81) to produce a 1991 funding amount of $2,930,660 for active            






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