Two Paths to Saving for Retirement - Benefits Online

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Two Paths to Saving for Retirement - Benefits Online

Your Savings Plan Resources

Northrop Grumman’s savings plans offer you a unique and valuable opportunity to save for your future on a tax-deferred

basis — and we are committed to helping you make the most of it. The Company offers a wide range of resources and

tools to help you learn about your plan and the fundamentals of investing, to estimate your future retirement needs, and

to establish a savings goal. Call or go online for more information today.

TWO PATHS TO

Saving

for Retirement

RESOURCE

HOW TO ACCESS IT

Which one is right for you

Benefits OnLine

> eLearning tutorials

> Investor education

> Summary plan descriptions

http://benefits.northropgrumman.com

For detailed

information on the

Retirement Path

portfolios and the

core investment

funds, see the

Fund Fact sheets

available on My

Benefits Access

or by calling the

NGBC.

My Benefits Access

> Personalized savings plan account information

> Calculators, planning tools, and investment fund

information

> Transactions (e.g., change your contribution rate,

reallocate your investments, etc.)

Northrop Grumman Benefits Center

> Personalized savings plan account information

> Answers to your questions (service center

representatives are available Monday through

Friday from 9:00 a.m. to 6:00 p.m. Eastern time)

http://benefits.northropgrumman.com

Click on My Benefits Access

1-800-894-4194

Outside the U.S.: 718-354-1338

PATH 1

Use a professional

investment manager

This Guide and the content on the Benefi ts OnLine and My Benefi ts

Access Web sites provide a summary of important information about

your participation in a Northrop Grumman savings plan. The Guide

is not a summary plan description, but is a summary of material

modifi cations. Complete details about the plans are contained in the

legal plan documents that govern plan operation and administration.

If there is a discrepancy between the information provided in the

Guide or enrollment Web site and the provisions of the plan

documents, the plan documents will govern.

PATH 2

Build your own

investment portfolio

Northrop Grumman reserves the right in its sole discretion to

terminate, suspend, withdraw, amend, or modify the plans at any

time and for any reason.

NGSP-FSSP/DEC 06-0230

Prepared for participants in the Northrop Grumman Savings Plan and Financial Security and Savings Program

4


Path 1

Let a professional investment manager design and manage an investment portfolio based

on your target retirement age.

Path 2

Build and monitor your own investment portfolio with several core investment fund

options and the Schwab PCRA ® .

Northrop Grumman’s Retirement Path portfolios

are designed to simplify saving and investing for

retirement. If you’re too busy to actively manage your

retirement savings or you simply prefer to delegate

the task to an expert, a Retirement Path portfolio may

be right for you.

Each portfolio is managed by an investment

professional, so you can feel confi dent that your

retirement money is being managed in accordance

with sound investment principles. Under the

leadership of this professional, your portfolio will be:

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>

>

Targeted to a specific retirement date —

All you have to do is choose the portfolio that’s

closest to the year you plan to retire or withdraw

your money

Broadly diversified — The investment manager

determines the portfolio’s asset allocation, investing

among a wide range of investments from several

different asset classes to help minimize your risk

Adjusted over time — The investment manager

gradually adjusts the investment mix to maximize

your return for a given level of risk, based on your

current life stage.

Northrop Grumman offers fi ve Retirement Path

portfolios ranging from the 2040 Retirement Path

Retirement Path Portfolios

Target

Retirement Path

2010

Retirement Path

2020

Retirement Path

portfolio, designed for investors who will retire in 30

years or more, to the Target Retirement Path portfolio,

designed for investors who are approaching or have

already reached retirement. To address these two very

different investment needs, the 2040 portfolio invests

primarily in assets that offer high long-term risk and

return potential, such as stock funds, while the Target

Retirement Path portfolio allocates a larger portion to

investments that emphasize capital preservation and

the potential for medium to low risk and return, such

as bond funds and money market funds.

Over time, the asset allocation of your selected

portfolio is adjusted to refl ect your changing

objectives — slowly moving from an aggressive

investment strategy when retirement is many years

away to a conservative strategy as retirement

approaches. When a portfolio reaches its target year,

it is merged into the Target Retirement Path portfolio.

For example, the 2010 portfolio will be merged into

the Target Retirement Path portfolio in the year 2010.

By choosing just one Retirement Path portfolio, you

can implement a diversifi ed, professionally managed

retirement strategy in just one easy step. If you prefer

to invest more aggressively or more conservatively

than others in your age group, you can simply

choose a portfolio (or a mix of portfolios) with a

higher or lower target retirement date than your own.

2030

Retirement Path

2040

Retirement Path

If you prefer to design and manage a savings and

investment strategy on your own, the Northrop

Grumman Savings Plan and Financial Security and

Savings Program offer a wide range of investment

options from which to choose, including:

>

>

Eight core investment funds that provide a

range of risk and return potential. These core

funds provide a convenient way to diversify your

investments on the basis of your individual needs

and strategy.

The Schwab Personal Choice Retirement

Account ® (PCRA), a self-directed brokerage

account offered through Charles Schwab & Co.,

Inc. The Schwab PCRA enables you to invest

among a selection of more than 3,200 available

mutual funds and individual securities (e.g., stocks

and bonds).

Core Investment Funds

Stable

Value Fund

U.S. Fixed

Income

Fund

Lower risk/short time horizon

Balanced

Fund

Asset Class

U.S. Equity

Fund

Capital Preservation

Income

Balanced

Growth

“Do It Yourself” Investing

When you invest in the core investment funds, it’s up

to you to select the mix of investments that will best

help you reach your investment goals. This “do-ityourself”

approach may be ideal for investors who

want to personally manage their investments and

are comfortable making their own asset allocation

decisions, yet still prefer to invest in well-diversifi ed

funds rather than select individual securities.

The core investment funds give you the opportunity

to diversify your investments among a range of asset

classes, including capital preservation, income,

balanced, and growth.

International

Equity Fund

Small Cap

Fund

The position of the

various funds on the risk

spectrum does not refl ect

an absolute relation of

the funds, but only their

expected, relative ranking

over the long term.

Emerging

Markets

Equity Fund

Northrop

Grumman

Fund

Higher risk/long time horizon

Individual Investing

If you are looking for an opportunity to exercise even greater control over

your investments, the Schwab PCRA* may be right for you. It offers the

fl exibility to choose from a wide range of mutual funds and individual

stocks and bonds so you can build a portfolio uniquely customized to

you.** The Schwab PCRA is appropriate if you have time to evaluate,

select, and monitor your investments.

As you evaluate whether the PCRA approach is right for you, keep in mind

the following:

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>

>

*

**

Developing and monitoring your own investment strategy requires time

and attention.

Investing through the Schwab PCRA requires a higher level of

attentiveness and account management effort than do the other

Savings Plan options. In addition, the Schwab PCRA may charge

a fee each time you place a trade order, which may result in higher

administrative fees than you would pay if you invested solely in either

the Retirement Path portfolios or core investment funds.

To enroll in the Schwab PCRA, you must be a participant in the

Savings Plan so that you can transfer balances from your core funds

or direct new contributions to the Schwab PCRA. In addition, you

must keep a minimum balance of $1,000 in the core funds. See the

summary plan description for your savings plan on Benefits OnLine

for more information.

The Schwab PCRA is not offered under the Financial Security and Savings Program.

The Schwab PCRA offers access to more than 3,200 mutual funds from over 360 mutual fund families. More than

1,700 of these funds are Mutual Fund OneSource ® funds, which are available without loads or transaction fees.

More than 600 of the 3,200 funds are load-waived funds that are typically only available to institutional clients.

Which Investment

Approach Is Right

For You

Retirement Path

portfolios:

You don’t have the

time and/or desire

to manage your

investments and

prefer to delegate

that task to an

expert.

Core investment

funds:

You have the time

and interest to learn

about investment

fundamentals and

are comfortable

making your own

asset allocation

decisions.

Schwab PCRA:

You have the time

and interest to

actively manage

and monitor your

investments,

and want the

opportunity to

personally research

and select from

a wide range of

mutual funds,

individual stocks,

and bonds for your

portfolio.

Lower risk/short time horizon

• US Large Cap

• US Mid/Small Cap

• Developing/Emerging Markets

• US Real Estate

Higher risk/long time horizon

• US Bonds

• US Infl ation-linked Bonds

1 2 3

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