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Important Terms

Annuity—This is a form of benefit that provides a fixed monthly payment for a specified time period which could be a period of years or your lifetime.

  • Under OTRS, you receive payments each month, from the time you retire until your death. You can also choose an annuity that would pay benefits to your spouse after your death. If you do, the annuity is calculated so that the value of the benefit remains the same but, because the benefit will continue after your death, the amount you receive is decreased. The decrease accounts for the fact that benefits will be paid over a longer period of time.
  • Under DCP, ORP and the Voluntary Retirement Plans,
    if you elect to receive an annuity, the value of your account at retirement is used to purchase the annuity. The amount you receive each month is based on the amount of money used to purchase the annuity (your account balance), your age at retirement, and your life expectancy. You can elect an annuity that pays benefits
    for your lifetime only or for the lifetimes of you and your spouse.

Defined Contribution Plan—DCP, ORP, and the Voluntary Retirement Plans are all defined contribution plans. Under this type of plan, the benefits you receive at retirement depend entirely on the amount of contributions made to the plan on your behalf and the investment returns on the account. Depending on the plan, contributions may be made by you or OU.

Defined Benefit Plan—OTRS is a defined benefit plan. It pays retirement benefits according to a definite formula. You do not have an individual account under a defined benefit plan, so you do not direct the investments and your retirement benefits are not affected by the plan’s investment returns.

Investment Returns—When you invest your account, the gains or losses on your investments are called investment returns.

Go here for more Financial Definitions.