These contracts offer a guarantee of principal, accumulated interest, and future interest for a specified period of time, but do not contain benefit-responsive features. Some are medium-term fixed or floating rate instruments issued to foreign investors. The contract typically guarantees principal and a zero-coupon interest rate. GICs are issued to both defined benefit and defined contribution plans, but defined contribution sales predominate in a low interest rate environment. No fiduciary asset management responsibility is assumed.
Most pools are bank collective trusts, although separate account and mutual fund pools exist.
All pool transactions are at contract value. Defined contribution participants have liquidity at book value as in all defined contribution stable value funds. Contract holders in bank collective trust pools are generally offered book value liquidity with notice of up to one year. Mutual fund contract holders have liquidity at book subject to a fixed penalty. The funds are supported by insurance companies based on the volume of the particular type of business that they have issued in the state.