MasterCard Worldwide U.S. Retirement Program Changes

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1 MasterCard Worldwide U.S. Retirement Program Changes

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3 U.S. RETIREMENT PROGRAM CHANGES MasterCard recently announced changes to the U.S. retirement benefit plans. This booklet explains the. changes and how they may affect your total retirement benefit. Please review the information provided to. have a full understanding of what is changing and when. One of MasterCard s priorities is to have a competitive benefit structure while maintaining a tightly controlled operating and financial environment. Therefore, we assess our total remuneration programs (compensation and benefit plans) regularly and compare them to peer group companies programs. Consistent assessments indicate that defined benefit plans such as the MasterCard Accumulation Plan (MAP) are no longer prevalent. Instead, there is more emphasis on defined contribution plans with performancebased contributions. Therefore, in order to provide a competitive and consistent retirement benefit to all U.S. employees, we will be adjusting our retirement plan mix by phasing out pay credit contributions in MAP over the next two years and reinforcing our defined contribution plan, the MasterCard Savings Plan. By 2013, all U.S.-based MasterCard employees will be eligible to receive a 125% match on the first 6% of pay contributed to the Savings Plan. As of 2013, the Savings Plan will be the single platform for all U.S.-based employees to receive ongoing contributions toward retirement benefits. Table of Contents Highlights of What s Changing... 2 How the MasterCard Accumulation Plan (MAP) Will Change... 3 How Pay Credits Are Currently Determined... 3 Pay Credits Based on Age... 3 Upcoming Changes to Pay Credits... 4 Illustrative Examples... 5 How the MasterCard Savings Plan Will Be Enhanced... 6 Current MasterCard Contributions... 6 New MasterCard Contributions... 7 Increased Matching Contributions... 7 Financial Planning Resources

4 Highlights of What s Changing >..During 2011 and 2012, your MasterCard Accumulation Plan (MAP) benefit will continue to grow, but the pay credit level will be reduced. >..Beginning in 2012, MasterCard will introduce a discretionary, performance-based contribution to the MasterCard Savings Plan. All employees who are actively employed at MasterCard on December 31 each year will be eligible to receive this Company-provided annual contribution, if MasterCard meets our financial targets. >..Effective December 31, 2012, MAP will be frozen. Specifically, no future pay credits will be added to MAP accounts. However, MAP accounts will continue to earn interest credits until payment is elected. >..Starting January 1, 2013, for all employees eligible to receive a Matching Contribution in the MasterCard Savings Plan, MasterCard will match 125% of their contributions up to the first 6% of their per pay period base pay. HOW MAP WILL CHANGE OVER TIME Plan Element MAP Pay Credits Current Level Reduced Level Reduced Level Pay Credits Cease MAP Interest Credits Interest Credits Interest Credits Interest Credits Interest Credits Accumulate Accumulate Accumulate Accumulate Savings Plan Match Current Level Current Level Current Level 125% for All Participants Savings Plan Discretionary Contribution Does Not Apply Does Not Apply 2012 Contribution Accumulates* * Dependent on MasterCard meeting financial performance targets 2012 Contribution Paid* 2013 Contribution Accumulates* 2

5 How the MasterCard Accumulation Plan (MAP) Will Change If you are an employee hired by MasterCard before July 1, 2007, you currently participate in MAP. Under the current program, MasterCard adds pay credits to your MAP account every payroll period and interest credits each month. You earn pay credits based on your annual pay credit percentage and your total cash compensation (base salary plus bonus compensation). Your benefit accumulates over time at no cost to you. How Pay Credits Are Currently Determined Effective June 30, 2007, the pay credit percentage for most MAP participants was based on the number. of years of service completed as of December 31, 2006 (as shown in the table to the right). For the remainder of 2010, pay credits will continue to be applied at this level. So, for example, if you had completed eight years of service as of December 31, 2006, you will continue to receive pay credits at the 5.75% level through December 31, YOUR CURRENT MAP PAY CREDIT PERCENTAGE If your completed years of service as of December 31, 2006 were Your MAP pay credit percentage for 2007 through 2010 is % % % % % MasterCard Accumulation Plan Pay Credits Based on Age If you have been a MAP participant since. January 1, 2000, and were at least age 50 on December 31, 2000, you have been eligible. for an enhanced pay credit structure based on. your age. Effective June 30, 2007, your pay. credit percentage has been based on the age you attained prior to July 1, 2007 (as shown in the. table to the right). So, for example, if you turned. age 60 prior to July 1, 2007, you are eligible for. a 14% pay credit. This rate will continue to apply through December 31, There is no change to the 30-year MAP pay credit service cap. Your account does not receive pay credits in any year following the year in which you complete 30 years of service with MasterCard. However,. your account continues to receive interest credits. MAP PAY CREDIT BASED ON AGE If your age on your birthday prior to July 1, 2007 was The pay credit percentage applied to your MAP account for 2007 through 2010 is % 60 or older 14% 3

6 MasterCard Accumulation Plan Upcoming Changes to Pay Credits 2011 and 2012 will be transition years.. During these two years, your MAP pay credit percentage will be reduced: >..In 2011, you will either receive 4% or 8% pay credits based on the schedule shown in. the table to the right. >..In 2012, all MAP participants will receive pay credits at the 4% level. YOUR CURRENT MAP PAY CREDIT PERCENTAGE If your 2010 pay credit percentage is In 2011, your pay credit percentage will be In 2012, your pay credit percentage will be 4.5% 4% 4% 5.75% 4% 4% 8% 4% 4% 10% 8% 4% 12% 8% 4% 14% 8% 4% Effective December 31, 2012, no future pay credits will be added to your account. Even though no further pay credits will be made, your account will continue to earn interest credits until the time you elect payment. 4

7 Illustrative Examples Here are a few high-level examples that show how MAP pay credits and the Company-provided contributions to the MasterCard Savings Plan (described on pages 6 and 7) will change over the next three years. EXAMPLE 1: PAY CREDIT BASED ON SERVICE On July 1, 2007, Jane participated in MAP. At that time she had three years of service which made her eligible for 4.5% pay credits (frozen at that level for future years of participation). On January 1, 2011, Jane will have six years of service and total compensation of $75,000. This means Jane will be eligible to receive pay credits equal to 4% of her total compensation in 2011 and Starting in 2013, Jane will no longer receive pay credits. However, her MAP account will continue to earn interest credits even after the pay credits end. MasterCard Accumulation Plan Plan Year Current MAP Pay Credits New MAP Pay Credits % X $75,000 = $3,375 4% X $75,000 = $3, % X $75,000 = $3,375 4% X $75,000 = $3, and later years 4.5% X $75,000 = $3,375 $0 EXAMPLE 2: PAY CREDITS BASED ON SERVICE On July 1, 2007, Joe participated in MAP. At that time he had 12 years of service which made him eligible for 8% pay credits (frozen at that level for future years of participation). On January 1, 2011, Joe will have 15 years of service and total compensation of $50,000. This means Joe will be eligible to receive pay credits equal to 4% of his total compensation in 2011 and Starting in 2013, Joe will no longer receive pay credits. However, his MAP account will continue to earn interest credits even after the pay credits end. Plan Year Current MAP Pay Credits New MAP Pay Credits % X $50,000 = $4,000 4% X $50,000 = $2, % X $50,000 = $4,000 4% X $50,000 = $2, and later years 8% X $50,000 = $4,000 $0 EXAMPLE 3: PAY CREDITS BASED ON AGE On January 1, 2000, Jeff participated in MAP and was eligible to receive the enhanced pay credit available at that time. On July 1, 2007, Jeff was age 57 with 17 years of service which made him eligible for 12% pay credits (frozen at that level for future years of participation). On January 1, 2011, Jeff will have 20 years of service and total compensation of $100,000. This means Jeff will be eligible to receive pay credits equal to 8% of his total compensation in 2011 and 4% of compensation in Starting in 2013, Jeff will no longer receive pay credits. However, his MAP account will continue to earn interest credits even after the pay credits end. Plan Year Current MAP Pay Credits New MAP Pay Credits % X $100,000 = $12,000 8% X $100,000 = $8, % X $100,000 = $12,000 4% X $100,000 = $4, and later years 12% X $100,000 = $12,000 $0 EXAMPLE 4: SAVINGS PLAN CONTRIBUTIONS Current Annual Base Pay Current MasterCard Contributions Matching Contributions Increased Matching Contributions New MasterCard Contributions Discretionary Contributions* Total Contributions $50,000 6% X $50,000 = $3, % X $50,000 = $3, % X $50,000 = $625 $4,375 $75,000 6% X $75,000 = $4, % X $75,000 = $5, % X $75,000 = $938 $6,563 $100,000 6% X $100,000 = $6, % X $100,000 = $7, % X $100,000 = $1,250 $8,750 *Dependent on MasterCard meeting financial performance targets. 5

8 MasterCard Savings Plan How the MasterCard Savings Plan Will Be Enhanced All MasterCard employees are eligible to contribute to the MasterCard Savings Plan and receive Company Matching Contributions. You gain full ownership of the Company Matching Contributions or earn 100% vesting rights after four years of service (with partial vesting during your first three years). Current MasterCard Contributions > If you were hired before July 1, 2007, MasterCard matches your Savings Plan contributions dollar for dollar, up to the first 6% of your base annual pay. for the payroll period in which such contributions. are made. >..If you were hired on or after July 1, 2007, the Savings Plan is your retirement benefit. MasterCard matches your Savings Plan contributions at a rate of $1.25 for each dollar you contribute, up to the first 6% of your base annual pay for the payroll period in which such contributions are made. Six reasons why the MasterCard Savings Plan is a great place to save. 1. Matching Contributions: MasterCard makes a Company Matching Contribution to the first 6% of annual base pay you save. 2. Tax-Deferred Savings: You pay no federal income tax on your savings, MasterCard s contributions or the investment gains until you take your savings out of the plan. 3. Investment Choice: You make investment elections, so you can manage your funds at a risk level you determine. 4. Flexibility: You can change how much you contribute and your investment mix at any time. 5. Convenience: Automatic payroll deduction makes it easy to save on a regular basis. 6. Portability: You can roll over or receive the value of the vested portion of your account if you leave MasterCard (early withdrawal penalties may apply). 6

9 New MasterCard Contributions >..Starting in 2012, all participants will be eligible to receive a new Company-provided annual discretionary contribution. This non-elective discretionary Company Contribution, subject to MasterCard meeting financial performance targets, will be added to your MasterCard Savings Plan account regardless of whether you make voluntary contributions. Here s how it will work. Each year, MasterCard may decide to contribute up to 1.25% of your annual base pay to your MasterCard Savings Plan account. If MasterCard elects to make the discretionary contribution, as long as you are an active employee on December 31 each year, you ll receive the contribution. This Company-provided Contribution will be added to your account after the end of the year (usually before the end of the first quarter of the following year). So, for example, if MasterCard elects to make a discretionary contribution, the annual contribution for 2012 will be made on or before March 31, This discretionary contribution will be subject to the same vesting schedule as the Matching Contributions. In determining your vesting rights for the discretionary contribution, all service prior to 2012 will count. So, for example, if you have completed four years of service by January 1, 2012, you will be 100% vested. in the discretionary contribution. DISCRETIONARY CONTRIBUTION VESTING SCHEDULE Your Years of Service Your Vested Percentage at MasterCard 1 40% 2 60% 3 80% 4 100% MasterCard Savings Plan.Increased Matching Contributions >..Effective January 1, 2013, all participants will be eligible to receive their Company Matching Contributions at the rate of $1.25 for each $1 contributed, up to the first 6% of annual base pay. When you elect to save 6% of your base annual pay, you will receive Company Matching Contributions equal to 7.5% of your base annual pay. The Company match will be contributed to your MasterCard Savings Plan account each pay period. 7

10 Financial Planning Resources Financial Planning Resources Remember, you can access your retirement plan information at any time. You can also make changes to how much you contribute to your MasterCard Savings Plan account and how you invest your MasterCard Savings Plan account balance: >..On the Web: Log on to using your Employee Number and Password anytime 24 hours a day, seven days a week. >..Over the phone: Call the MasterCard Retirement Plans Service Center at to use the automated system, or dial 0 to speak to a representative between 8:00 a.m. and 8:00 p.m. Eastern time (ET), Monday through Friday (except. stock market holidays). As a MasterCard employee, you are eligible for financial planning services at no cost to you. Services are provided through The Ayco Company, a Goldman Sachs Company. Call , Monday through Thursday, 9:00 a.m. to 8:00 p.m. and Friday, 9:00 a.m. to 5:00 p.m. ET to speak with a financial planner who can help with a range of topics including your MasterCard Savings Plan saving and investment strategy, tax and estate planning, debt reduction, college expenses or home purchase. Or you can log on to the Ayco Financial network at to access financial modeling tools, interactive calculators and an online financial reference library. About This Booklet This Notice is being provided to you in accordance with Section 204(h) of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ) and Section 4980F of the Internal Revenue Code of 1986, as amended. It is being provided to all affected plan participants and alternate payees. This Notice also constitutes your summary of material modifications as required by Section 104(b) of ERISA and should be kept with a copy of the plan s summary plan description and other important plan documents. This Notice provides only a brief summary of the plan provisions that have been changed. As such, it is not intended to address every situation. Your plan benefits are determined by the Administrative Committee for the MasterCard Accumulation Plan, in conjunction with the MasterCard Accumulation Plan Document, which serves as the legal document governing the Plan. If you have any questions regarding how this notice applies to your plan benefits, please contact: People Services 2200 MasterCard Blvd. O Fallon, MO (636) ( internally) people_services@mastercard.com This booklet does not guarantee payment of benefits that are not vested or continued employment. Although every effort has been made to accurately describe the changes to the MasterCard plans, if there is a conflict between the booklet and the plan document, the provisions in the plan document apply. At any time and for any reason, MasterCard reserves the right to amend, modify, terminate or discontinue the MasterCard Savings Plan or any other MasterCard benefit. 8

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