COLA Conversion
Grumman Pension Plan COLA Conversion Factors - January 2009
The historical Northrop Grumman Pension Plan Summary Plan Description explains the waiver of COLA feature available to retiring employees who are eligible to receive COLA. Those who waive COLA receive an actuarially equivalent fixed benefit on a monthly basis. Employees with Frozen Grumman Benefits that were earned prior to 1993 are generally eligible for this feature.
The "conversion factors" used to convert the COLA benefits into a fixed amount paid in your monthly pension checks are based on your age at retirement, the current 30 Year Treasury Rate (established monthly) and the change in the Consumer Price Index (established annually by the Bureau of Labor Statistics). The 2008 CPI change of 0.1% will be used beginning with April 1, 2009 retirements and will be used for retirements through March 1, 2010.
The following table illustrates the effect of the CPI change on the conversion factor at various ages and Treasury Rates:
|
0.1% CPI |
|
3.0% CPI |
| Age | Treasury Rates | | Treasury Rates |
|---|
| 2.50% | 3.50% | 4.50% | | 2.50% | 3.50% | 4.50% |
|---|
|
| 50 |
1.0144 |
1.0132 |
1.0122 |
|
1.6260 |
1.5677 |
1.5181 |
| 51 |
1.0141 |
1.0130 |
1.0119 |
|
1.6074 |
1.5521 |
1.5050 |
| 52 |
1.0138 |
1.0127 |
1.0117 |
|
1.5891 |
1.5367 |
1.4920 |
| 53 |
1.0135 |
1.0124 |
1.0115 |
|
1.5710 |
1.5214 |
1.4790 |
| 54 |
1.0132 |
1.0122 |
1.0112 |
|
1.5532 |
1.5063 |
1.4661 |
| 55 |
1.0129 |
1.0119 |
1.0110 |
|
1.5357 |
1.4913 |
1.4532 |
| 56 |
1.0126 |
1.0116 |
1.0108 |
|
1.5184 |
1.4764 |
1.4405 |
| 57 |
1.0122 |
1.0114 |
1.0105 |
|
1.5014 |
1.4618 |
1.4278 |
| 58 |
1.0119 |
1.0111 |
1.0103 |
|
1.4846 |
1.4473 |
1.4152 |
| 59 |
1.0116 |
1.0108 |
1.0101 |
|
1.4682 |
1.4329 |
1.4027 |
| 60 |
1.0113 |
1.0105 |
1.0098 |
|
1.4520 |
1.4188 |
1.3903 |
| 61 |
1.0110 |
1.0102 |
1.0096 |
|
1.4361 |
1.4049 |
1.3780 |
| 62 |
1.0107 |
1.0100 |
1.0093 |
|
1.4205 |
1.3911 |
1.3659 |
| 63 |
1.0104 |
1.0097 |
1.0091 |
|
1.4051 |
1.3776 |
1.3538 |
| 64 |
1.0100 |
1.0094 |
1.0088 |
|
1.3901 |
1.3643 |
1.3420 |
| 65 |
1.0097 |
1.0091 |
1.0086 |
|
1.3754 |
1.3512 |
1.3303 |
| 66 |
1.0094 |
1.0089 |
1.0083 |
|
1.3610 |
1.3383 |
1.3187 |
| 67 |
1.0091 |
1.0086 |
1.0081 |
|
1.3469 |
1.3257 |
1.3074 |
| 68 |
1.0088 |
1.0083 |
1.0078 |
|
1.3332 |
1.3133 |
1.2962 |
| 69 |
1.0085 |
1.0080 |
1.0076 |
|
1.3197 |
1.3012 |
1.2852 |
| 70 |
1.0082 |
1.0078 |
1.0074 |
|
1.3066 |
1.2893 |
1.2744 |
Please keep in mind that employees eligible for COLA may decline the conversion to a fixed amount and receive COLA payments determined each year based on annual CPI as provided in the Pension Plan.
NOTE: The COLA conversion rate is not the only factor that should be considered when deciding on a retirement date.
You should also consider the loss of income from not working, additional pension accruals if continuing to work, the cost differential in health benefits, discontinuation of 401(k) contribution including company matching contributions, as well as any other factors that might impact your future financial well-being.