v3.21.2
Pension and Other Postretirement Benefits
 12 Months Ended
Sep. 30, 2021
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits
Note 11—Pension and Other Postretirement Benefits
The Company sponsors various qualified and non-qualified defined benefit pension and other postretirement benefit plans that provide for retirement and medical benefits for all eligible employees residing in the U.S. The Company also sponsors other pension benefit plans that provide benefits for internationally-based employees at certain non-U.S. locations.
Disclosures presented below include the U.S. pension plans and the non-U.S. plans, comprising only the Visa Europe plans. Disclosures relating to other U.S. postretirement benefit plans and other non-U.S. pension benefit plans are not included as they are immaterial, individually and in aggregate. The Company uses a September 30 measurement date for its pension and other postretirement benefit plans.
Defined benefit pension plans. The U.S. pension benefits under the defined benefit pension plan were earned based on a cash balance formula. An employee’s cash balance account was credited with an amount equal to 6% of eligible compensation plus interest based on 30-year Treasury securities. In October 2015, the Company’s board of directors approved an amendment of the U.S. qualified defined benefit pension plan such that the Company discontinued employer provided credits after December 31, 2015. Plan participants continue to earn interest credits on existing balances at the time of the freeze.
The funding policy for the U.S. pension benefits is to contribute annually no less than the minimum required contribution under ERISA.
Under the Visa Europe plans, retirement benefits are provided based on the participants’ final pensionable pay and are currently closed to new entrants. However, future benefits continue to accrue for active participants. The
funding policy is to contribute in accordance with the appropriate funding requirements agreed with the trustees of the UK pension plans. Additional funding amounts may be agreed to with the UK pension plan trustees.
Summary of Plan Activities
A reconciliation of pension benefit obligations, plan assets, funded status and amounts recognized in the Company’s consolidated balance sheets were as follows:
U.S. PlansNon-U.S. Plans
 September 30,September 30,
 2021202020212020
 (in millions)
Change in pension benefit obligation:
Benefit obligation at beginning of period
$920 $919 $563 $528 
Service cost— — 4 4 
Interest cost25 28 10 10 
Actuarial (gain) loss(8)37 (53)11 
Benefit payments(60)(64)(28)(17)
Foreign currency exchange rate changes
— — 24 27 
Benefit obligation at end of period$877 $920 $520 $563 
Accumulated benefit obligation$877 $920 $520 $563 
Change in plan assets:
Fair value of plan assets at beginning of period
$1,142 $1,090 $525 $490 
Actual return on plan assets205 114 9 5 
Company contribution1 2 21 22 
Benefit payments(60)(64)(28)(17)
Foreign currency exchange rate changes
— — 21 25 
Fair value of plan assets at end of period
$1,288 $1,142 $548 $525 
Funded status at end of period$411 $222 $28 $(38)
Recognized in consolidated balance sheets:
Non-current asset$417 $229 $30 $— 
Current liability(1)(1)— — 
Non-current liability(5)(6)(2)(38)
Funded status at end of period$411 $222 $28 $(38)
Amounts recognized in accumulated other comprehensive income (loss) before tax consist of the following: 
U.S. PlansNon-U.S. Plans
September 30,September 30,
 2021202020212020
 (in millions)
Net actuarial (gain) loss$(11)$135 $47 $93 
Benefit obligations in excess of plan assets were as follows:
 U.S. PlansNon-U.S. Plans
September 30,September 30,
 2021202020212020
 (in millions)
Accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation at end of period$(6)$(7)$(520)$(563)
Fair value of plan assets at end of period$— $— $548 $525 
Projected benefit obligation in excess of plan assets
Benefit obligation at end of period$(6)$(7)$(520)$(563)
Fair value of plan assets at end of period$— $— $548 $525 
Net periodic benefit cost consists of the following:
U.S. PlansNon-U.S. Plans
For the Years Ended September 30,
 202120202019202120202019
 (in millions)
Service cost$— $— $— $4 $4 $4 
Interest cost25 28 32 10 10 13 
Expected return on assets(70)(72)(71)(17)(15)(18)
Amortization of actuarial (gain) loss 3 6 — 4 2 — 
Settlement (gain) loss(1)8 7 2 — — 
Total net periodic benefit cost$(43)$(30)$(32)$3 $1 $(1)
The service cost component of net periodic benefit cost is presented in personnel expenses while the other components are presented in other non-operating income (expense) on the Company’s consolidated statements of operations.
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) consist of the following: 
U.S. PlansNon-U.S. Plans
For the Years Ended September 30,
202120202019202120202019
 (in millions)
Current year actuarial (gain) loss$(143)$(5)$114 $(45)$21 $27 
Amortization of actuarial gain (loss)(3)(14)(7)(6)(2)— 
Current year prior service cost— — — — — 1 
Total recognized in other comprehensive (income) loss$(146)$(19)$107 $(51)$19 $28 
Total recognized in net periodic benefit cost and other comprehensive (income) loss$(189)$(49)$75 $(48)$20 $27 
For the year ended September 30, 2021, the net gain was primarily attributable to market-driven increases in the fair value of plan assets combined with an increase in the discount rate.
Weighted-average actuarial assumptions used to estimate the benefit obligation and net periodic benefit cost were as follows:
U.S. PlansNon-U.S. Plans
 For the Years Ended September 30,
 202120202019202120202019
Discount rate for benefit obligation:
Pension2.98 %2.88 %3.26 %2.10 %1.60 %1.80 %
Discount rate for net periodic benefit cost:
Pension2.88 %3.27 %4.23 %1.60 %1.80 %2.90 %
Expected long-term rate of return on plan assets6.50 %7.00 %7.00 %3.50 %3.00 %3.00 %
Rate of increase(1) in compensation levels for:
Benefit obligationNANANA2.50 %2.50 %2.50 %
Net periodic benefit costNANANA2.50 %2.50 %2.50 %
(1)This assumption is not applicable for the U.S. plans due to the amendment of the U.S. qualified defined benefit pension plan in October 2015, which discontinued the employer provided credits effective after December 31, 2015.
The U.S. plans include a cash balance plan with promised interest crediting rates. Under the plan rules, for fiscal 2021, 2020 and 2019, the weighted average interest crediting rates for the benefit obligation were 1.98%,1.88%, 2.26%, respectively, and the weighted average interest crediting rates for the benefit cost set at the beginning of the period were 1.88%, 2.26% and 3.23% for fiscal 2021, 2020 and 2019, respectively.
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 pension plan assets, as appropriate, to ensure that allocations are consistent with its investment strategy and within target allocation ranges. For U.S. pension plan assets, the Company’s investment strategy is to invest in the following: equity securities of 35% to 65%, fixed income securities of 43% to 53% and other, primarily consisting of cash equivalents to meet near term expected benefit payments and expenses, of up to 4%. At September 30, 2021, U.S. pension plan asset allocations for these categories were 50%, 48% and 2%, respectively, which were within target allocation ranges.
For non-U.S. pension plan assets, the Company’s investment strategy is to invest in the following: equity funds of 12%, interest and inflation hedging assets of 50% and other of 38%, consisting of cash and cash equivalents, corporate debt and asset-backed securities, multi-asset funds and property. At September 30, 2021, non-U.S. pension plan asset allocations for these categories were 12%, 45% and 43%, respectively, which generally aligned with the target allocations.
The following tables set forth by level, within the fair value hierarchy, the pension plans’ investments at fair value as of September 30, 2021 and 2020, including the impact of transactions that were not settled at the end of September:
U.S. Plans
Fair Value Measurements at September 30 Using Inputs Considered as
Level 1Level 2Level 3Total
20212020202120202021202020212020
(in millions)
Cash equivalents$20 $17 $— $— $— $— $20 $17 
Collective investment funds— — 548 509 — — 548 509 
Corporate debt securities— — 455 373 — — 455 373 
U.S. government-sponsored debt securities
— — 28 30 — — 28 30 
U.S. Treasury securities
105 84 — — — — 105 84 
Asset-backed securities— — — — 31 37 31 37 
Equity securities101 92 — — — — 101 92 
Total
$226 $193 $1,031 $912 $31 $37 $1,288 $1,142 
Non-U.S. Plans
Fair Value Measurements at September 30 Using Inputs Considered as
Level 1Level 2Level 3Total
20212020202120202021202020212020
(in millions)
Cash and cash equivalents$18 $6 $— $— $— $— $18 $6 
Corporate debt securities— — 51 48 — — 51 48 
Asset-backed securities— — — — 78 67 78 67 
Equity funds— — 68 65 — — 68 65 
Multi-asset securities(1)
— — 333 339 — — 333 339 
Total
$18 $6 $452 $452 $78 $67 $548 $525 
(1)Multi-asset securities represent pension plan assets that are invested in funds comprised of broad ranges of assets.
Level 1 assets. Cash equivalents, which comprise of money market funds, U.S. Treasury securities and equity securities are classified as Level 1 within the fair value hierarchy, as fair value is based on unadjusted quoted prices in active markets for identical assets.
Level 2 assets. Collective investment funds are unregistered investment vehicles that generally commingle the assets of multiple fiduciary clients, such as pension and other employee benefit plans, to invest in a portfolio of stocks, bonds or other securities. Although the collective investment funds held by the plan are ultimately invested in publicly traded equity securities, their own unit values are not directly observable, and therefore they are classified as Level 2. Equity funds are investments in mutual funds that in-turn ultimately invest in equity securities of various jurisdictions. These are classified as level 2 as the equity funds held by the plan are not actively traded but the fair value of underlying securities are generally, although not always, determined with observable data and inputs. The fair values of corporate debt, multi-asset and U.S. government-sponsored securities are based on quoted prices in active markets for similar, not identical, assets.
Level 3 assets. Asset-backed securities are bonds that are backed by various types of assets and primarily consist of mortgage-backed securities. Asset-backed securities are classified as Level 3 due to a lack of observable inputs in measuring fair value.
Cash Flows
Expected future employer contributions and benefit payments are as follows:
U.S. PlansNon-U.S. Plans
(in millions)
Expected employer contributions
2022$1 $21 
Expected benefit payments
2022$122 $8 
2023$93 $8 
2024$84 $9 
2025$80 $9 
2026$72 $9 
2027-2031$278 $50 
Other Benefits
The Company sponsors a defined contribution plan, or 401(k) plan, that covers substantially all of its employees residing in the U.S. In fiscal 2021, 2020 and 2019, personnel costs included $141 million, $140 million, and $121 million, respectively, of expenses attributable to the Company’s employees under the 401(k) plan. The Company’s contributions to this 401(k) plan are funded on a current basis, and the related expenses are recognized in the period that the payroll expenses are incurred.