No, you will not have to choose between the two formulas. Instead, special transition benefits have been created to offer employees the opportunity to earn a benefit that would be close to — or even better than — the benefit they would have received under their current plans, as described in the Overview Brochure.

No. As long as you meet the SPP’s lump sum requirements at the time of your retirement, the lump sum option will continue to be available for your service through December 31, 2004 (your Part A benefit, as described in the Overview Brochure) — regardless of when you retire. For example, if you end your employment in April 2010 at or after age 55, you will be eligible to receive your SPP benefit for service through December 31, 2004 as a lump sum, provided that you are vested and elect to immediately retire.

No. No matter when you retire — whether during or after the five-year transition period you can receive the transition benefit.

The formula that will be used to calculate your Part B benefit is the current SPP formula ([1.5% x average pension earnings x years of service up to 35] + [1.33% x average pension earnings x years of service over 35] - [0.4% x Social Security covered compensation x years of service up to 35]), using the Northrop Grumman Pension Program's definition of pay and service.

The definitions of pay are generally the same in many respects. A key difference is that the Northrop Grumman Pension Program does not consider vacation payout. Both definitions include base pay, commissions, disability leave pay, incentive bonus pay, overtime pay, leave pay, and shift differentials, and exclude certain types of pay such as hiring bonuses and travel expense reimbursements. You can find the full definition of eligible pay in the Northrop Grumman Pension Program Summary Plan Description (SPD) at Benefits OnLine.

No. Your Part A benefit is separate, and reflects your service through December 31, 2004 and eligible earnings up to the time your employment ends. Your Part B benefit will reflect your service beginning January 1, 2005 and eligible earnings up to the time your employment ends. However, vesting service will continue to accumulate under your current vesting schedule for your entire benefit. Beginning January 1, 2005, you will earn a year of vesting service for each year in which you are paid (or are entitled to be paid) for 1,000 hours of work.

If you are an SPP participant, you will become vested in the Northrop Grumman Pension Program when you earn five years of vesting service, which includes your vesting service through December 31, 2004. Once you become vested, you will be eligible to receive both your SPP benefit for service through December 31, 2004 and your cash balance benefit for service beginning January 1, 2005 (as well as the applicable transition benefits). The following examples illustrate just a couple of scenarios:

Example 1: An employee with two years of vesting service as of December 31, 2004 will be vested in the Northrop Grumman Pension Program after he or she earns three more years of vesting service.

Example 2: An employee with four years of vesting service as of December 31, 2004 will be vested in the Northrop Grumman Pension Program after he or she earns one more year of vesting service.

If you are a Synoptics employee actively participating in the Northrop Grumman Retirement Plan B as of December 31, 2004, you will become vested in the Synoptics plan benefit and the Northrop Grumman Pension Program cash balance benefit after meeting the vesting requirements of Northrop Grumman Retirement Plan B (50% after two years of employment; 100% after three years of employment). New employees hired on or after January 1, 2005, will become vested after five years of vesting service.

Yes. As long as you are vested and meet the other lump sum eligibility requirements at the time of your retirement (at least age 55 and elect to retire immediately), the lump sum option will be available for your SPP benefit for service through December 31, 2004.

No. The "Rule of 9" applies only to the cash balance benefit. It does not affect your heritage TRW pension plan benefit nor does it affect your eligibility to receive a lump sum option for your SPP benefit for service through December 31, 2004.

No. The current schedule of early retirement subsidies* for the SPP benefit will continue to apply for your SPP benefit for your service through December 31, 2004 (Part A) and for your SPP transition benefit (Part B), if applicable.

*For employees who were hired prior to January 1, 2000: 80% at age 55 and up to 100% at age 60. For employees hired on or after January 1, 2000, different percentages apply.

As required by law, the SPP currently uses the government’s 30-year Treasury rate. Even though 30-year Treasury Bonds are no longer issued, the government continues to publish 30-year Treasury rates. You can find 30-year Treasury rates posted here.

Congress and the Department of Treasury are considering replacing the 30-year Treasury rate for purposes of calculating pension plan lump sums. We will communicate any required rate change to participants as soon as the government announces its decision.

"Vacation payout" is the payment you may receive for your unused vacation days. Actual vacation pay, holiday pay, bereavement pay, and sick pay are all included in the Northrop Grumman Pension Program’s definition of pay. For a complete definition of pay, please refer to the Northrop Grumman Pension Program Summary Plan Description.