A clear and friendly guide to understanding how group annuities grow money over time and provide future income.
If you’ve ever wondered how organizations help employees save for retirement in a structured, long-term way, you’ll often hear the term group annuities. More specifically, some plans come in a combined form called Group Annuities – Deferred Non-Variable and Variable. The name sounds technical, but the idea is much simpler when you break it down.
Below, we’ll walk through what this type of annuity actually is, how it works, and why employers and employees might choose it.
Understanding Group Annuities in Simple Terms
A group annuity is a contract purchased by an employer, association, or organization to help a group of people save for future income—usually for retirement. Instead of individuals buying separate contracts, everyone is included under one group plan.
The version we’re talking about here—Deferred Non-Variable and Variable Group Annuities—is a type of contract that lets money grow in two different ways before eventually turning into income payments at a future date.
To understand it clearly, let’s look at the two sides of this kind of annuity.
The Two Parts: Non-Variable and Variable
1. The Non-Variable (Guaranteed) Portion
This part grows based on guaranteed interest rates set by the insurance company.
Think of it as the “safe” portion.
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The insurer promises a minimum crediting rate.
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Sometimes, they may add extra interest depending on the contract.
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Your balance doesn’t move up and down with the market.
This gives participants a reliable foundation, even if investment markets are unpredictable.
2. The Variable Portion
This part works more like an investment account.
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The value changes based on the performance of the investment portfolio chosen by the policyholder (often the employer or plan sponsor).
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If the selected investments perform well, this portion grows faster.
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If the market dips, this portion can go down.
This offers growth potential, but with the natural ups and downs associated with investing.
How a Deferred Group Annuity Works
This type of annuity is deferred, which simply means payments don’t start right away. Instead, money is allowed to accumulate over time. At a chosen future date—such as retirement—the contract begins paying income.
Here’s the general flow:
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Contributions are made (usually by the employer, employees, or both).
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Money grows using a mix of guaranteed interest (non-variable) and market-based returns (variable).
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At retirement or another future date, the annuity converts the accumulated balance into a stream of payments.
It’s like planting seeds now and setting a timer so the income “harvest” arrives in the future.
Who Typically Uses This Type of Annuity?
Deferred non-variable and variable group annuities are common in:
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Employer-sponsored retirement plans
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Pension plans
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Group savings programs
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Nonprofit and public-sector benefit plans
They help organizations offer steady retirement benefits while also giving participants a chance to grow their savings through market-based returns.
Why This Type of Group Annuity Can Be Valuable
Balanced Growth
By combining guaranteed interest with investment-based earnings, this annuity provides both stability and growth potential.
Future Income
Participants know that at a specific date, their savings will convert into regular payments—helpful for retirement planning.
Professional Management
The group structure often means that investments are managed by professionals, relieving individual participants of investment decisions.
Predictability for Employers
Organizations appreciate the flexibility of offering both secure and growth-oriented features in one contract.
A Simple Example
Imagine an employer offers a retirement plan that includes this type of group annuity.
Part of each contribution goes into a guaranteed interest bucket. The rest goes into investment funds chosen by the plan sponsor.
Over 20 or 30 years, the guaranteed part grows steadily, while the variable part rises and falls with the market. When the employee reaches retirement age, the combined total turns into monthly payments.
It’s a blend of safety and opportunity packaged into one plan.
Final Thoughts
Group Annuities – Deferred Non-Variable and Variable offer a balanced way to build future income. By mixing guaranteed interest with investment-based growth, they help participants enjoy both stability and long-term potential. For many organizations, this combination makes them an attractive choice for group retirement benefits.
If you’re exploring employer-sponsored retirement plans or trying to understand how future income payments are built, this type of annuity is a helpful concept to know.
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