Under Internal Revenue Service rules, a group annuity is a defined-benefit plan. It guarantees a pension benefit to qualified participants, and it defines how that benefit is calculated, and how long and to whom it will be paid (Ref 4).
Hereof, is a group annuity contract a security?
Benefit. The benefit of a group annuity is the employer can operate it at a lower cost when compared to other pension arrangements if it is a fixed annuity. In addition, annuities are not securities, but are insurance products.
Consequently, who is responsible for paying the annuity premiums?
The rates on fixed annuities are derived from the yield that the life insurance company generates from its investment portfolio, which is invested primarily in high-quality corporate and government bonds. The insurance company is then responsible for paying whatever rate it has promised in the annuity contract.