MasterCard 2013 Annual Report Download - page 84

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
80
The estimated amounts that are expected to be amortized from accumulated other comprehensive income into net
periodic benefit cost in 2014 are as follows:
Pension Plans Postretirement
Plans
(in millions)
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4 $ —
Weighted-average assumptions used to determine net periodic benefit cost were as follows for the years ended December
31:
Pension Plans Postretirement Plans
2013 2012 2011 2013 2012 2011
Discount rate . . . . . . . . . . . . . . . . . . . . . 3.30% 4.25% 5.00% 3.75% 4.25% 5.25%
Expected return on plan assets . . . . . . . 3.29% 6.00% 8.00% * * *
Rate of compensation increase:
Qualified Plan. . . . . . . . . . . . . . . . . . . * 5.37% 5.37% * * *
Non-Qualified Plan. . . . . . . . . . . . . . . 5.00% 5.00% 5.00% * * *
International pension plans. . . . . . . . . 2.24% * * * * *
Postretirement Plans. . . . . . . . . . . . . . * * * 5.37% 5.37% 5.37%
* Not Applicable
The assumed health care cost trend rates have a significant effect on the amounts reported for the Postretirement Plans.
A one-percentage point change in assumed health care cost trend rates for 2013 would have the following effects:
1% increase 1% decrease
(in millions)
Effect on postretirement obligation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7 $ (6)
The effect on total service and interest cost components would be less than $1 million.
The Company's discount rate assumptions are based on a yield curve derived from high quality corporate bonds, which
is matched to the expected cash flows to each of the respective Plans.
For the Qualified Plan, the Company considered the following to determine the assumption for the expected weighted-
average return on plan assets: (1) historical return data for both the equity and fixed income markets over the past ten-,
twenty- and thirty-year periods; (2) projected returns for both equity and fixed income; and (3) the weighting of assets
within our portfolio at December 31, 2013 by class.
Plan assets are managed with a long-term perspective intended to ensure that there is an adequate level of assets to
support benefit payments to participants over the life of the Qualified Plan. Plan assets are managed within asset
allocation ranges, towards targets of 80% fixed income, 12% large/medium cap U.S. equity, 4% small cap U.S. equity,
and 4% non-U.S. equity. Considering the asset allocation along with intent to maintain a majority of Plan assets in
fixed income securities, the Company reduced the 2013 expected return on plan assets assumption from 6% to 5%.
The Valuation Hierarchy of the Qualified Plan's assets is determined using a consistent application of the categorization
measurements for the Company's financial instruments. See Note 1 (Summary of Significant Accounting Policies).
Mutual funds (including small cap U.S. equity securities and non-U.S. equity securities) are public investment vehicles
valued at quoted market prices, which represent the net asset value of the shares held by the Qualified Plan and are