Visa 2013 Annual Report Download - page 104

VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2013
Weighted Average Actuarial Assumptions:
Fiscal
2013 2012 2011
Discount rate for benefit obligation:(1)
Pension .................................................. 4.81% 3.85% 4.70%
Postretirement ............................................. 2.76% 2.21% 3.39%
Discount rate for net periodic benefit cost:
Pension .................................................. 3.85% 4.70% 5.25%
Postretirement ............................................. 2.21% 3.39% 3.45%
Expected long-term rate of return on plan assets(2) ............... 7.00% 7.50% 7.50%
Rate of increase in compensation levels for:
Benefit obligation ........................................... 4.50% 4.50% 4.50%
Net periodic benefit cost ..................................... 4.50% 4.50% 4.50%
(1) Based on a “bond duration matching” methodology, which reflects the matching of projected plan
liability cash flows to an average of high-quality corporate bond yield curves whose duration
matches the projected cash flows.
(2) Primarily based on the targeted allocation, and evaluated for reasonableness by considering such
factors as: (i) actual return on plan assets; (ii) historical rates of return on various asset classes in
the portfolio; (iii) projections of returns on various asset classes; and (iv) current and prospective
capital market conditions and economic forecasts.
The assumed annual rate of future increases in health benefits for the other postretirement
benefits plan is 8.5% for fiscal 2014. The rate is assumed to decrease to 5% by 2020 and remain at
that level thereafter. These trend rates reflect management’s expectations of future rates. Increasing or
decreasing the healthcare cost trend by 1% would change the postretirement plan benefit obligation by
less than $1 million.
Pension Plan Assets
Pension plan assets are managed with a long-term perspective to ensure that there is an
adequate level of assets to support benefit payments to participants over the life of the pension plan.
Pension plan assets are managed by external investment managers. Investment manager
performance is measured against benchmarks for each asset class on a quarterly basis. An
independent consultant assists management with investment manager selections and performance
evaluations.
Pension plan assets are broadly diversified to maintain a prudent level of risk and to provide
adequate liquidity for benefit payments. The Company generally evaluates and rebalances the pension
plan assets, as appropriate, to ensure that allocations are consistent with target allocation ranges. The
current target allocation for pension plan assets is as follows: equity securities of 50% to 80%, fixed
income securities of 25% to 35% and other, primarily consisting of cash to meet near term expected
benefit payments and expenses, of up to 7%. At September 30, 2013, pension plan asset allocations
for the above categories were 71%, 26% and 3%, respectively, which were within target allocation
ranges.
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