Northrop Grumman Corp., Falls Church, Va., expects $500 million in discretionary cash contributions to its worldwide pension plans in 2013. The discretionary contributions are in addition to required contributions, which the company says are less than $100 million.
Northrop made discretionary contributions of $300 million during 2012, down from $1 billion in 2011.
James F. Palmer, vice president and chief financial officer, said during the company's fourth-quarter earnings call Wednesday that 2012 investment return on pension assets was “slightly more than 12%,” above Northrop's assumed return rate of 8.25%.
Pension assumptions in an earnings presentation reveal the company is lowering its assumed rate of return to 8% in 2013. It is also lowering the discount rate used to calculate pension obligations — to 4.12% for 2013 from 5.03% in 2012.
Northrop's U.S. defined benefit assets totaled $23.3 billion as of Sept. 30, according to Pensions & Investments data. Asset allocation was 39.8% domestic fixed income, 19.1% domestic equity, 13.3% international equity, 8.4% private equity, 6.9% real estate, 6.4% alternatives, 3.3% global equity and 2.8% cash.