I would like to take this opportunity to provide information about the Northrop Grumman Pension Program and Savings Plan and to remind you of the resources available to help you understand and manage your benefits.

The Northrop Grumman Pension Program
The Northrop Grumman Pension Program provides a fixed retirement income benefit based on your pay and years of service with the Company. Your account grows based on a set formula and is not affected by fluctuations in the stock market. Your pension benefit is fully paid for by Northrop Grumman Corporation and is protected under the rules of the Employee Retirement Income Security Act (ERISA) and the Pension Benefit Guaranty Corporation (PBGC).

• The Northrop Grumman Pension Program is Appropriately Funded – The plans that make up Northrop Grumman’s Pension Program are funded by Northrop Grumman according to IRS guidelines. These guidelines require the Company to fund the plans to ensure that future pension obligations (benefit payments to employees) will be met. Northrop Grumman bears all of the investment risk.
• PBGC Guarantees Pension Plan Benefits – Additionally, pension plans are protected by the PBGC, an insurance agency that insures pension benefits and covers losses up to a certain dollar amount in the event of a plan sponsor’s bankruptcy. While this occurrence is highly unlikely, you have the security of knowing that your benefit is insured.  For more information on the PBGC please see their website www.pbgc.gov.

The Northrop Grumman Savings Plan
The Northrop Grumman Savings Plan gives you the opportunity to save for retirement on a tax-deferred basis. Certain participants are also eligible to receive company matching and/or company contributions. If you participate in the plan, you are responsible for managing your account, which includes deciding what percentage of your pay to contribute to the plan, and how to invest your contributions and any contributions the Company makes on your behalf. The plan offers a wide range of investment options to enable you to diversify your investments based on your retirement savings goals and risk tolerance.

The Savings Plan’s core investment fund options and Retirement Path Portfolios are a combination of separate accounts and comingled funds. The assets in these funds are owned by you and other shareholders, are managed by professional portfolio managers, and are regulated by the U.S. Securities and Exchange Commission (SEC). Because these funds invest in a large number of securities, they generally are not unduly affected by the business actions of any one company.

The Plan's Investment Committee has the fiduciary responsibility to prudently choose and monitor the Plan’s investment choices, and the Committee members take that responsibility very seriously. The fiduciary responsibility is not simply to select the least expensive investment choices available, but to select investment choices that offer a broad range of alternatives with materially different risk and return characteristics and that offer a participant the opportunity to minimize risk by diversifying his or her portfolio

If you are currently investing in the Schwab Personal Choices Retirement Account (PCRA) through the Savings Plan, a further layer of protection may be available via the Securities Investor Protection Corporation (SIPC).  SIPC provides insurance up to certain limits for holders of mutual fund shares (among other assets) against losses arising from the bankruptcy of a broker-dealer. See www.sipc.gov for additional details.

During times of financial uncertainty, it’s important to remember that the Savings Plan is a long-term investment. As you might expect, different types of investments are likely to experience different levels of performance over short periods. You might lose money in one investment and earn money in another. By placing your money in more than one type of investment, you can reduce the impact that periodic losses from any one investment may have on your overall account balance.

Retirement Planning
The events of the last several weeks serve as a reminder of the importance of retirement planning. Whether you’re just starting your career with Northrop Grumman or nearing retirement, a proactive retirement strategy can help you weather economic downturns to achieve your long-term retirement goals. Northrop Grumman provides several resources to help you:

• Plan details and education - Review the summary plan descriptions (SPDs) http://benefits.northropgrumman.com for detailed descriptions of your pension and Savings Plan benefits.
• Financial education and modeling tools - Go to My Benefits Access to utilize tools designed to help you establish a savings goal, manage your savings plan investments and perform transactions.
• Retirement planning seminars - Learn the basics of investing and how to establish a savings goal, or if you're nearing retirement, find out what you should do to prepare to retire.  Company-sponsored seminars are available at many Northrop Grumman locations.  See your local benefits service representative for details.