A group annuity contract is issued by a life insurance company to a tax-qualified retirement plan.
In group annuities, employees do not own shares of specific funds, but own "units" in the underlying pooled investment. Because of their structure, group annuity investments are not considered to be "securities" and are therefore not subject to the uniform disclosure rules of FINRA (formerly the NASD).
There are two primary fees that group annuities charge: the "contract charge" (or "administrative fee") and "separate account fee." The contract charge is the cost of operating the group annuity, and includes the insurance agent's commissions. The separate account fee goes to the management of the underlying investment. This fee is on top of the expenses of the underlying investment.
All group annuity contracts also offer the right for plan participants to purchase annuities.