The Pension and Life Assurance Plan of Wachovia Bank, NA ("the Plan") 2015 Trustees Annual Statement April 2015 Every year the Trustees of the Plan produce a Summary Funding Statement, like this one, to give you an update on the Plan s funding position. We ask the Plan actuary to help us monitor the Plan s finances and in June 2014, we provided a summary of the results of the actuarial valuation of the Plan as at 31 December 2012 and a snapshot of the Plan as at 31 December 2013. This statement provides an update as at 31 December 2014 as well as restating the position in the two previous years. As you may recall, the Trustees and Wells Fargo Bank, NA ( the Company s ) agreed target is to buy-out members benefits with an insurance company by end 2018. The valuation as at 31 December 2012 revealed a buy-out shortfall of 22.4m. Although this had improved to 15.6m by 31 December 2013, by 31 December 2014 it had fallen back to 20.2m. Further details are given on pages 2 and 3. During the year, the Government also announced, in the 2014 Budget, some significant changes to pensions. We have enclosed a separate leaflet outlining some of these changes and what these new retirement options may mean for you. If you are considering making any changes to your own pension arrangements, you should strongly think about taking financial advice. Financial advisers local to your home or workplace can be found at unbiased.co.uk. If you have any questions or would like to see general information about the Plan please visit the member website at http://wachoviapensions.lcp.uk.com. Yours faithfully John Kempster (Trustee Solutions Limited) On behalf of The Trustees of the Pension and Life Assurance Plan of Wachovia Bank, NA 1 The Pension and Life Assurance Plan of Wachovia Bank, NA Summary Funding Statement
Results of the actuarial valuation at 31 December 2012 Target level of assets: 53.3m 22.4m 30.9m At 31 December 2012 the target level of assets was 53.3m, but the actual assets were 30.9m, representing a shortfall of 22.4m. This target reflects the estimated cost of securing members benefits with an insurance company by 31 December 2018. In order to eliminate this deficit, the Company agreed with the Trustees to pay into the Plan: 1.722m in 2013, 2.5m each year from 2014 to 2017 (inclusive) and 12.04m by December 2018. Actual assets Shortfall In addition, the Company agreed to make payments into a separate ring-fenced account of 1.8m each year payable from 2014 to 2017 (inclusive). It is anticipated that, to the extent any deficit exists in December 2018, the final contribution of 12.04m will be partly financed from this ring-fenced account. As part of the valuation process, the Trustees reviewed the financial strength of the Company and it was considered strong. The Trustees will regularly review the position with the Company. Assumptions Assets of the Plan The Trustees ask the Plan's actuary to provide regular checks on the Plan s finances. These regular check-ups involve estimating a target level of assets. The target assets are the estimate at a given time of the actual cost to secure all member benefits in full with an insurance company. There are many factors which affect the actual costs, most notably assumptions concerning how long members will live, the future rate of inflation and prevailing marketing conditions. The Trustees are now working with their The assets of the Plan come from contributions paid by the Company, together with investment growth. The assets of the Plan are held separately from the Company and the Plan s Trustees are responsible for investing this money, after taking professional advice. The assets are held in a common fund they are not held in separate pots for each member. Pensions are paid to retired members out of this common fund. advisers to ensure that the Plan will be ready to 2 The Pension and Life Assurance Plan of Wachovia Bank, NA Summary Funding Statement
approach the insurance market. A snapshot of the Plan on 31 December 2014 Target level of assets: 61.7m At 31 December 2014 the target level of assets was 61.7m, but the actual assets were 41.5m, representing a shortfall of 20.2m. 20.2m 41.5m As we previously advised, the Plan s financial position had improved by 31 December 2013, with the target level of assets being 50.6m and actual assets amounting to 35m, leaving a shortfall of 15.6m. Actual assets Shortfall In the subsequent twelve months to 31 December 2014, the actual assets of the Plan increased to 41.5m, but the target level of assets increased by a wider margin to 61.7m, leaving a shortfall of 20.2m. As noted in the assumptions, the Trustees and the Company are now funding to an agreed target of buying-out members benefits with an insurance company by the end of 2018. Consequently, the target level of assets will be subject to volatility, driven primarily by factors affecting how insurance companies set the costs of securing benefits. The Trustees have switched the Plan s assets to be more aligned to the factors affecting the buy-out market but we would still expect to see the snapshot change from year to year. In the past twelve months, markets have been volatile with gilt yields dropping which pushes up the costs of securing benefits. The additional costs represented by this volatility have been partially offset by both the contributions paid the Company and by the Plan s investment strategy. The Trustees continue to monitor the position with its advisers and the Company. The shortfall does not affect the Plan s ability to pay pensions to members and we can confirm that pensions are being paid in full to members who retired. 3 The Pension and Life Assurance Plan of Wachovia Bank, NA Summary Funding Statement
Your questions answered Q: Has the Company taken any money out of the Plan? Regulations require us to confirm that the Company has not taken any money out of the Plan in the last 12 months and that the Pensions Regulator has not intervened to modify the Plan Rules or impose a Schedule of Contributions. We can confirm that none of these events have occurred. Q: When will I receive further updates? We will monitor the position closely over the coming years and update you regularly as to progress against our funding target. In particular, we will send you Summary Funding Statements on a regular basis. If you have any questions or would like to see general information about the Plan, please visit the member website. Further details are shown below. Q: What if the Company were unable to pay the necessary contributions? There is nothing to suggest that this will be the case, and as mentioned earlier, the Trustees view the employer covenant as strong. However, in the unlikely event that the Company were to become insolvent, the assets of the Plan at that time would be used to secure benefits. If there were a shortfall at that time, the Plan could apply to the Pensions Protection Fund. More information and guidance about the Pension Protection Fund is available at pensionprotectionfund.org.uk or by contacting the Pension Protection Fund, Renaissance, 12 Dingwall Road, Croyden, CR0 2NA (tel 0845 600 2541). 4 The Pension and Life Assurance Plan of Wachovia Bank, NA Summary Funding Statement
Other news Big changes to pensions As you may be aware, the Government announced significant changes to pensions options at retirement and these changes are being introduced with effect from 6 April 2015. Further information regarding these changes is set out in the enclosed leaflet. Changes to the pensions tax regime Last month the Government also announced that the Lifetime Allowance ( the LTA ) will reduce from its current level of 1.25m to 1m from 6 April 2016. From 2018/19, the LTA will also increase by inflation. The LTA is the maximum amount of pension savings that you can make tax-free over your lifetime. If, when you come to take your savings, these are higher than the LTA, then any pension above this level will be subject to an additional tax charge. Protection from the charge is available in certain cases. If you think you may be affected, you should check the total value of all your existing pension savings and how much (if any) of your LTA you have already used up. Changes to your pension payment and increase date The Trustees have decided to simplify the administration of the Plan by harmonising the pension payment and increase dates for all members of the Plan. This harmonisation process will only impact on Wachovia Section members (ie not former Core State members) and the Trustees wrote to affected members concerning their proposals in December 2014, inviting comment by 23 January 2015. No members raised any objections to the proposed changes, and consequently the Trustees intend to proceed with the proposed changes. This means that, with effect from 1 May 2015, all pensions paid under the Plan will be paid on first of each month and increases will be applied each 1 May. Regulations require the Trustees to confirm this decision to members and to confirm that in making the changes, the Trustees have exercised their powers to make a regulated modification to the Plan. Furthermore, the Plan actuary has confirmed that members will be no worse off as a result of these changes. All current pensioners under the Plan will receive a letter shortly setting out the increase effective from 1 May 2015. Plan data controller Under the Data Protection Act 1998 (the DPA), the Trustees of the Plan are registered as a data controller for the Plan s personal member data with the Information Commissioner s Office (ICO). The ICO is the organisation responsible for upholding information rights, including in relation to data privacy, for individuals. As a consequence of recent guidance from the ICO, the Plan actuary, Fiona Morrison, has now registered as a joint data controller, and she will work together with the Trustees to meet the requirements of the DPA. If you want further information in this regard, please see the ICO s website (ico.org.uk/for_the_public) for more information. 5 The Pension and Life Assurance Plan of Wachovia Bank, NA Summary Funding Statement
Where can I get more information? If you have any questions or would like to see general information about the Plan please visit the member website at http://wachoviapensions.lcp.uk.com For a copy of the Plan s financial accounts, rules, investment policy or other documents, please contact our administrators, Lane Clark & Peacock LLP, using the contact details below. 020 7439 2266 team.wachovia@lcp.uk.com The Trustees of the Pension and Life Assurance Plan of Wachovia Bank, NA c/o Lane Clark & Peacock LLP 95 Wigmore Street London W1U 1DQ Are your details up to date? Please let us know if your contact details or partner s details have changed. Issued by the Pension and Life Assurance Plan of Wachovia Bank, NA April 2015 Copyright the Pension and Life Assurance Plan of Wachovia Bank, NA. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the Pension and Life Assurance Plan of Wachovia Bank, NA. The Pension and Life Assurance Plan of Wachovia Bank, NA, c/o Lane Clark & Peacock LLP, 95 Wigmore Street, London, W1U 1DQ 6 The Pension and Life Assurance Plan of Wachovia Bank, NA Summary Funding Statement