The American Council on Gift Annuities (ACGA) has promulgated suggested maximum payout rates since 1927 that equate to at least a 50% residuum to issuing charities nationwide. New York State law also requires charities to use charitable gift annuity payout rates that are estimated to provide a 50% residuum to the issuing charity. Additionally, The New York Department of Financial Services (NYDFS) is required by statute to independently publish maximum allowable payout rates for charitable gift annuities with a target residuum of 50%.

Until recently, the ACGA suggested rates have consistently been lower than NYDFS rates. However, in 2020, NYDFS implemented a new methodology that causes its maximum allowable payout rates to be adjusted quarterly. The NYDFS rates are also gender-specific. The constant adjustment of rates and the gender specificity of those rates increase the costs and complexity to charities. Further, as NYDFS rates apply to only New York State residents, the new methodology puts New York State residents and charities at a disadvantage relative to donors and charities in other states should NY rates be lower than the ACGA suggested rates. New York is the only state to promulgate maximum allowable payout rates. NYDFS rate tables can be found at https://www.dfs.ny.gov/apps_and_licensing/life_insurers/reserve_requirements. Click the “Present Value of Immediate Annuities . . .” link on this page to view the latest tables. The maximum allowable payout rate under the current statute is calculated by dividing the maximum income by 10 for the age in question. The table for a quarter applies to gift annuities made during that quarter. However, if the rates for the new quarter have not yet been published, the rate from the preceding quarter may be used. Quarterly rates are typically published by the 10th day of each new quarter.

Over the last three years, the ACGA has been in close contact with NYDFS and we have a tentative solution to allow charities to use a single table of unisex rates and to use a simpler calculation for maximum allowable rates under New York statute. The solution requires a legislative change and the ACGA is working on behalf of its membership to effect that change. This type of advocacy highlights the importance of the ACGA and the support of our members and sponsors.

The ACGA is pleased to announce that on June 8th, 2023, the New York Legislature passed Bill A4599-A. This bill establishes that New York's maximum allowable payout rates will be unisex in nature and simplifies the suggested maximum charitable gift annuities rates for New York organizations and donors. The new methodology in New York will allow charities to rely on ACGA rates and will also allow the New York Department of Financial Services (NYDFS) to continue to regulate organizations that might want to issue charitable gift annuities with rates that would be higher than permissible by NYDFS regulations. This significant accomplishment is the result of the ACGA's tireless work to recognize and address the issue of maximum rates allowed by the state of New York.

While the ACGA is excited to announce the passing of the bill, Governor Hochul still must sign the bill before it can become effective. Once the Governor signs the bill, it will become effective in 90 days. The ACGA is hoping that the Governor will sign the bill by August 15th so that it will be in effect in time for year-end fundraising efforts.

Many ACGA members and other charities have been impacted by the New York statutes that set maximum charitable gift annuity rates in that state. Previous statutes and the methodology used by NYDFS, created instances where the ACGA suggested maximum rates were higher than those allowed by New York. This caused confusion and disruption to charities and donors. NYDFS also does not publish joint life rates which causes further confusion for charities.

The work involved many meetings with New York regulators and direct advocacy by the ACGA to get this fix codified into New York law. This result demonstrates the irreplaceable impact of the ACGA monitoring state regulations and the importance of supporting our work! Without the ACGA, the negative impact on New York charities and donors would have continued indefinitely.

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