Annuity Terms and Definitions

Annuity, Deferred
An annuity that begins more than 1 month after separation from employment at some future point when retirement age is reached. (Also called deferred benefits.)

Annuity, Reduced
A retiree's basic annuity that is reduced because of retirement before a certain age (for reasons other than disability). Annuities are also reduced because of unpaid deposits or redeposits, or to provide a survivor annuity. (Also called reduced benefits.)

Designation of Beneficiary
Notice, signed by you and witnessed by two persons, indicating the person(s) you want to receive your life insurance benefits. The form generally used for life insurance designations is the Designation of Beneficiary form (SF 2823).

Annuity Starting Date
For most types of annuities, the first day of the month following either the date after the day you separate from service or the date after your last day in pay, whichever is earlier. If you were in pay status for three days or less in the month of your retirement, the annuity starting date is the date after either the day you separate from service or your last day in pay and in which you meet age and service requirements, whichever is earlier

Option B
Coverage, equal to up to 5 multiples of your annual basic rate of pay, that you can elect in addition to Basic insurance. Also called additional optional insurance.

Option A
$10,000 in coverage that you can elect in addition to Basic insurance. Also called standard optional insurance.

Accidental Death
Bodily injuries sustained solely through violent, external and accidental means, and as a direct result of the bodily injuries, independently of all other causes, and within 90 days afterwards, you lose your life.

Conversion
The exchange of group insurance for insurance under an individual policy purchased from a private insurance company approved by the Office of Personnel Management.

Defined Benefit Pension Plan
A pension plan that promises participants a specified monthly benefit at retirement.

Market Rate of Interest
The percentage of interest paid on certain FERS deposits and refunds. Based on the average interest earned by the Civil Service Retirement and Disability Fund in the previous year. In 1998, the interest rate is 6.75%.