OPTIONAL RETIREMENT PROGRAM
ORP

Certain professionals and administrators employed in public higher education become eligible to elect the Optional Retirement Program (ORP) in lieu of TRS. It is a one-time irrevocable choice between two distinct plans suitable to different individual needs that must be made before the 91st day after becoming eligible. This decision should be made very carefully after considering both TRS and ORP plans in light of personal circumstances. New UHCL benefits eligible employee’s who have received the ORP option and elected ORP prior to their empolyment, will be required to participate in ORP. ORP-eligible employees should obtain specific information from UHCL’s benefits office as well as a complete overview of the two programs at www.thecb.state.tx.us.
 
ORP is an individualized defined contribution plan in which each participant selects from a variety of investments offered by several companies (authorized by UHCL and the UH System and available from the Office of Human Resources) through annuity contracts or mutual fund investments. Because participants manage their own personal investment accounts, ORP entails more individual risk and responsibility than that associated with TRS membership. Benefits are a direct result of the amounts contributed and any net return on the investments selected by each participant. Upon termination from Texas public higher education, ORP participants with more than one year of participation retain control over all investments (both employee and state contributions). Participants who terminate with one year or less of initial participation forfeit state contributions made during that period of employment. Post-termination distributions are determined by individual contract provisions, federal income tax law and personal preference. Contracts may provide for complete or periodic withdrawals when eligible, or annuity income for a specified number of years or for life. ORP has no provisions for death and disability benefits similar to those provided by TRS. Administrative costs are paid by the participant through varying fees, “loads” and/or amount of interest paid.
 
Both the employee and the state, through UHCL make contributions to ORP based on percentages of the employee’s salary. The percentages are established by the Texas Legislature and may fluctuate over time. Employee contribution rates for September 1, 2003, through August 31, 2005, are 6.65 percent for ORP participants. The state contribution rate for both plans is six percent. Institutions are authorized to provide local supplements to the ORP state rate (up to 2.5 percent) under certain conditions. Contributions are not subject to federal income tax until paid as benefits.