A friendly guide to understanding how immediate non-variable and variable group annuities work and how they turn savings into quick-start income.
A Group Annuity – Immediate Non-Variable and Variable may sound like a mouthful, but once you break it down, it’s actually a straightforward concept. This type of annuity shows up in workplace retirement programs and employer-sponsored benefit plans. It’s designed to help people turn a lump sum into income that starts soon—usually within a year.
If you’re trying to understand how it works, what makes it different, and why employers might offer it, this guide will walk you through everything in simple, friendly language.
Understanding the Two Parts: Non-Variable and Variable
This group annuity combines two different ways of growing money:
1. The Non-Variable (Guaranteed) Portion
This part of the annuity earns interest at a guaranteed crediting rate set by the insurer. Sometimes, additional interest may be added depending on the contract.
-
It grows steadily and predictably
-
It does not depend on market performance
-
It provides a layer of stability for the overall plan
Think of this as the “steady and reliable” part of the contract.
2. The Variable Portion
The second part works more like an investment account.
-
Its value fluctuates depending on the performance of the underlying investment portfolio
-
The investment choices are selected by the policyholder (often the employer or plan sponsor)
-
It offers growth potential, but also comes with market ups and downs
This piece adds an opportunity for higher returns, especially over longer periods.
What Makes It “Immediate”?
The word immediate simply means the annuity starts making payments soon after the contract begins. In this case, the rules require that payments must begin within 13 months.
This is different from a deferred annuity, where payments start years later. With a Group Annuity – Immediate Non-Variable and Variable, the income starts quickly, making it helpful for:
-
Newly retired employees
-
Employees receiving a lump-sum benefit
-
Organizations transitioning employees into pension-style income
Payments may be monthly, quarterly, or at another frequency depending on the contract.
How the Accumulation Works Before Payments Start
Even though the annuity is “immediate,” there is still a short accumulation period. The contract includes:
-
A guaranteed-interest portion that grows at the crediting rate
-
A variable portion that grows (or shrinks) based on investment performance
These two parts together make up the total value that will be used to calculate the annuity payments.
Because payments must begin quickly, the accumulation window is usually brief, but both components still play a role in shaping the final payout.
How Payments Are Made
Once the annuity enters its payout phase—within the required 13-month timeline—the insurer begins sending income to participants.
Depending on the contract:
-
Payments may be fixed, based on the guaranteed portion
-
Payments may vary, based on the performance of the variable portion
-
Or they may be a blend of both
This creates a balance between stability and the possibility of growth.
Why Employers Use This Type of Group Annuity
Group Annuities – Immediate Non-Variable and Variable are often used in workplace benefit plans because they offer:
Quick Access to Income
Payments begin within a year, making it useful for employees entering retirement or transitioning out of a company.
A Mix of Security and Growth
The guaranteed portion ensures a stable foundation, while the variable part allows participants to benefit from market performance.
Professional Investment Management
The policyholder—usually the employer—selects the underlying investment options, reducing the burden on individual employees.
Predictable Structure
Because payments begin quickly, this annuity helps employers offer clear and timely retirement benefits.
A Simple Real-Life Example
Imagine an employee retiring with a lump-sum benefit. Instead of taking cash all at once, the company offers a Group Annuity – Immediate Non-Variable and Variable.
Part of the money goes into a guaranteed-interest account. The rest goes into a variable investment fund. Within a few months, the retiree begins receiving monthly payments.
Each payment may stay steady or change slightly based on investment performance, giving the retiree both reliability and growth potential.
Final Thoughts
A Group Annuity – Immediate Non-Variable and Variable is a helpful tool for turning savings into income that starts quickly. By combining guaranteed growth with investment-based potential, it provides a balanced approach for employees who need income soon. Whether you’re navigating workplace benefits or planning for retirement, understanding this type of annuity can help you make more confident financial decisions.
Want to explore something else? Here’s another article you might enjoy:
