Northrop Pension Overview - Benefits Online

benefits.northropgrumman.com

Northrop Pension Overview - Benefits Online

Retirement Overview


Today’s Topics

• Retirement Plan Overview

Pension Estimates

Benefits OnLine

• Applying for Retirement

• Additional Benefit Plans

• Resources

• Questions

2


Retirement Plan Overview

for Northrop Heritage Employees


Northrop Grumman

Pension Program

• Effective 7/1/03 most historical pension plans were

amended to incorporate a cash balance feature.



Effective 1/1/04 for Norden Systems Retirement

Plan and Newport News Shipbuilding Inc.

Retirement Plan

Effective 1/1/05 for TRW Salaried Pension Plan

• Your benefit at retirement may consist of up to 3 parts

depending on your historical plan (if any) and when you

became eligible to participate.

– Part A: the historical benefit earned prior to the Program

effective date

– Parts B or C: transition benefits

– Part D: the benefit earned under the cash balance feature

only

4


Vesting Requirements

• Vesting means you have earned a non-forfeitable

right to your Pension benefit.

• Once you are vested, you will be eligible for a

Pension benefit even if you leave the company

prior to retirement age.

• Employees who terminate on or after January 1,

2008 are vested after completing 3 years of

vesting service

– you accrue one year of vesting service for each

year you work and are paid for 1000 or more

hours

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• Normal Retirement

When can you retire?

The later of:

– Age 65, or

– Your age on the earlier of fifth anniversary of your

participation in the Plan and the date you complete 3 years

of vesting service

– Effective the first day of the month coincident with or next

following your normal retirement age, as described above

• Early Retirement

– Age 55 with 10 or more years of vesting service

– Effective the first day of any month coincident with or

following the date you become eligible

• Historical pension plans may have different eligibility

dates

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Heritage Northrop Retirement Plan Benefits

Part A

Part B

5-Year Transition

Benefit

Part D

Your

benefit

under your

historical

plan

formula

through

06/30/03

Your benefit

under the

cash

balance

formula

beginning

07/01/08

Your benefit based on

+

a formula similar to the

+ =

one under your

historical plan formula

from 07/01/03 –

06/30/08

or

Whichever is greater

Part C

5-Year Transition Benefit

Your benefit under

the cash balance

formula from

07/01/03 – 06/30/08

Your

pension

benefit

7


Heritage Northrop

Retirement Eligibility

• If you are at least age 55 and have at least 10

years of vesting service, you can immediately

commence your pension benefit using early

retirement factors

• If you leave the company before reaching age

55 and have at least 10 years of vesting

service, you can commence your pension

benefit as early as age 55 using deferred

vested factors

8


Early Retirement Factors

Northrop Grumman Retirement Plan

Your age or points

when payments begin

55 years or 75 points

56 years or 76 points

57 years or 77 points

58 years or 78 points

59 years or 79 points

60 years or 80 points

61 years or 81 points

62 years or 82 points

63 years or 83 points

64 years or 84 points

65 years or 85 points

Percentage of benefit

that you receive

75.0%

77.5%

80.0%

82.5%

85.0%

87.5%

90.0%

92.5%

95.0%

97.5%

100%

Deferred

Vested benefit

46%

49%

53%

57%

62%

67%

72%

78%

85%

92%

100%

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Payment Options

• Part A, the greater of B or C and Part D

― Single life annuity

― 50%, 75% or 100% joint & survivor

― 10 years certain and continuous

― Age 62 level income with single life annuity

• Part A, the greater of B or C only

— Annual increase

— 50%, 75%, or 100% joint and survivor with annual increase

— 50%, 75%, or 100% joint & survivor with age 62 level income

10


Pension Estimates


Benefits OnLine Home Page

You can

log into

your My

Benefits

Access

page

here

http://benefits.northropgrumman.com

Accessible via the Internet

12


My Benefits Access - Pension Estimates

From the drop down

Menu on the home

page select

“Estimate

Retirement Income”

Next, enter

your

retirement

assumptions

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My Benefits Access

Pension Estimates - Results

To see your pension payment options select “forms of payment”

Save your estimate for future reference.

You can compare estimates you run with different

assumptions

14


Pension Estimates - Forms of Payment

Historical with Transition Benefit (Part B or C) example

Historical

(Part A)

benefit

Transition

(better of

part B or

C) benefit

15


Pension Estimates - Forms of Payment

Cash Balance Benefit (Part D) example

Cash

balance

(part D)

benefit

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Applying for Retirement


Requesting Your Retirement Kit

• Request your retirement kit at least 2 months, (but no more

than 90 days), prior to your retirement date, by calling the

NGBC or by logging in to My Benefits Access

― For example, if retiring on May 5th and commencing your

pension on June 1st, you would need to initiate your

retirement no later than April 1 st

• Your Retirement Specialist will review your “next steps” with

you

• You will need to provide the following information:

— Date of retirement

— Date you want to commence your pension (1st of month)

— Spouse and/or Beneficiary information:

• Name

• Relationship

• Date of birth &

• SSN

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Retirement Kit Contents

Your retirement kit contains the following:

Pension Disclosure Notice or Starting Your Pension Benefit

Pension Calculation Statement

Pension Options Descriptions

Pension Options Worksheet

• Payment Delivery and Withholding Worksheet

• Notice of Rights

• Relative Value Notice

You should read all materials in your kit thoroughly.

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Making Your Pension Elections

• Follow instructions in the kit and make pension elections by:

– Calling the NGBC or

– Logging in to My Benefits Access (MBA)

• After making your elections, you will receive an Election

Confirmation Statement and a Pension Election Authorization

Form. Review the Confirmation statement carefully.

• If Confirmation Statement accurately reflects your elections,

sign and return the Pension Election Authorization Form by

the deadline reflected on the Confirmation Statement.

• Once pension elections have been made they are irrevocable

20


Additional Benefit Plans


Retiree Medical – Heritage Eligibility

• Eligibility for Heritage retiree medical was frozen as of

6/30/2003

- 1/1/2004 for Newport News

- 1/1/2005 for TRW

• If you were hired prior to the freeze date, you may be

eligible for a subsidized Heritage plan. You must contact

the Northrop Grumman Benefits Center (NGBC) to

determine your eligibility.

22


Retiree Medical – Access Only Eligibility

• If you were hired after the freeze date, or your heritage

company did not offer a retiree medical plan, you are

eligible for Access Only Retiree Medical coverage if you

meet the following requirements:

– At least age 55 with a minimum of 10 Years of

Service

– At least age 65 with a minimum of 5 Years of Service

• Access Only offers the same medical plan options but

the costs are not subsidized by Northrop Grumman

23


Benefits Continuation under the

Consolidated Omnibus Reconciliation Act

(COBRA)

Benefits coverage under COBRA, if elected, continues for a maximum of 18

months (extensions are available under certain circumstances)

– Medical coverage under COBRA automatically ceases if the employee or

spouse becomes eligible for Medicare after the date of COBRA election

• Your 18 month COBRA eligibility period begins on the first of the month

following your last day worked

• You may elect benefits continuation under COBRA only for those health

plan options that were in effect on the day before your benefits terminated

– You may continue some or all of your active benefits under COBRA

• COBRA is available for eligible dependents covered as of your last day of

work

24


Medicare Eligible Participants

• If you and/or a dependent are Medicare eligible

(because you are 65 or under 65 and disabled),

you MUST enroll in Medicare Part B as soon as

your active employment ends.

– Claims will be processed as though Medicare has paid

primary

– Failure to enroll in Medicare B as soon as active

employment ends may also result in an SSA/Medicare

imposed penalty on all future Medicare B premiums

– Visit www.medicare.gov for more information about

Medicare

• COBRA coverage is not considered active employer

coverage and therefore is secondary to Medicare.

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Enrollment

• If you are immediately eligible for retiree medical you may:

– Immediately elect retiree medical

– Defer coverage until after the COBRA period

– Defer retiree medical indefinitely

• If you want to enroll for Retiree Medical you must contact the

NGBC to request a Retiree Medical kit

– Kit will include your plan options, costs for each option and

enrollment instructions

• Dental and/or vision can be continued through COBRA even

after you commence retiree medical.

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Northrop Grumman Savings Plan

• You are 100% vested and entitled to the full value of your account,

which includes your contributions, company matching contributions

and all earnings.

• Retirement Account Contributions (for eligible employees

hired/acquired after 6/30/08) will become 100% vested after 3 years

of service.

• If your account balance exceeds $1,000, and your retirement date

has been recorded in the system, you may:

- Receive payment of your entire account balance (lump-sum distribution)

- Receive payment of a portion of your account balance (partial distribution)

- Leave your money in the NG Savings Plan and delay taking a

distribution as late as age 70½

- Roll over your account balance to an employer’s qualified plan or an IRA

• If your account balance is $1,000 or less, you will automatically

receive a lump-sum distribution 60 days following the recording of

your retirement date in the system.

– You may elect to roll over the distribution to an IRA or other qualified

account if requested prior to the scheduled force-out date.

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Northrop Grumman Savings Plan – Taxes

• If you elect to receive a distribution, your tax-deferred contributions,

company matching contributions and all investment earnings are taxed as

ordinary income. Unless you elect to directly roll over your account balance

to an IRA or other qualified plan, current law requires:

- 20% Federal Income Tax withholding on the taxable portion of the

distribution

- May be subject to an additional 10% Federal penalty

- State penalties may also apply in some cases

• Your Savings Plan account will not be assessed a 10% Federal Penalty Tax if:

- You are age 55 or older and elect early retirement

- You are 59½ years of age or older

- You roll over your distribution to an IRA or another employer’s qualified plan

within 60 days of the date you receive it

– Review the Northrop Grumman Savings Plan Summary Plan Description

(SPD) accessible at Benefits OnLine for more details

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Resources


Social Security

A reduced social security benefit is available as early as age 62.

Or, you can wait to receive your full Social Security benefit (based

on year you were born).

Apply 3 months before benefit is to begin.

• To apply for your Social

Security benefits:

– Via the web at

www.ssa.gov

– By telephone 1-800-772-

1213

– In person at your local

Social Security office

When You Can Receive

Your Full Social Security

Benefit

Age at Which You Are

Eligible to Receive

Year of

Your Full Social

Your Birth

Security Benefit

1937 or earlier 65

1938 65 and 2 months

1939 65 and 4 months

1940 65 and 6 months

1941 65 and 8 months

1942 65 and 10 months

1943 -1954 66

1955 66 and 2 months

1956 66 and 4 months

1957 66 and 6 months

1958 66 and 8 months

1959 66 ad 10 months

1960 and later 67

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Benefits OnLine Home Page

You can

log into

your My

Benefits

Access

page

here

http://benefits.northropgrumman.com

Accessible via the Internet

31


Northrop Grumman Benefits Center (NGBC)

A call center staffed by knowledgeable representatives

Available Monday through Friday

(excluding holidays)

9:00 a.m. to 6:00 p.m. ET

Call

1-800-894-4194

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Questions?

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