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Gift Annuity Rates

The ACGA Board and Rates Committee have a methodology in place to provide for the ongoing review of the factors that impact the suggested rate charts published by ACGA. As part of its ongoing review process, the Rates Committee of the ACGA monitors on a weekly basis certain interest rates that underlie the investment return assumptions used to create the rate schedules.  Annuitant mortality and other assumptions are evaluated and updated as necessary on an annual basis.  That methodology provides for the routine announcement of any modifications to the suggested rates following its spring Board meeting with an effective date of the following July 1st.

Click here for historic suggested maximum rate schedules going back to July 1, 1999.  If you are interested in information on rates prior to July 1, 1999, please contact us.

Suggested Maximum Rate Schedules Effective January 1, 2012 Unchanged as of April 8, 2014

New Suggested Maximum Rate Schedules Effective January 1, 2012 Unchanged as of April 8, 2014
Approved by the American Council on Gift Annuities on November 7, 2011
(reconfirmed on November 6, 2012 & April 15, 2013 & November 4, 2013 & April 8, 2014)

At its meeting in Baltimore in April 2014, the American Council on Gift Annuities (ACGA) Board of Directors voted to leave its schedule of suggested maximum charitable gift annuity (CGA) rates unchanged.  The rate schedule was originally published as of January 1, 2012 and will continue in effect until further notice.

Previously, the ACGA Board of Directors, at its semi-annual meeting on November 7, 2011, April 15, 2013 & November 4, 2013, as part of a continual monitoring process, reviewed the current assumptions that underlie the rates schedules.  Given the significant changes in the economic environment, the board approved a new schedule of suggested maximum gift annuity rates which became effective January 1, 2012.  At ages older than 60, when the majority of gift annuities are issued, one-life rates will decline by 0.5% to 0.8%.


Full Rates Report - The ACGA Rates Committee has prepared this report to explain the reasoning used in establishing suggested charitable gift annuity rates. Detail in this report goes beyond the assumptions used in arriving at the rates. The report provides historical background, statistical information, rationale behind the assumptions and more.  Click here to download a copy of the rates report.

Rates Brochure - Sponsors of the American Council on Gift Annuities are now able to download an electronic copy of our rate brochures and print them as they are needed. The brochure is a 4-panel document that can be printed on 8 ½ x 14 (legal size) paper. Click here to purchase printed copies or download a copy of the rates brochure.


 

Assumptions Underlying Suggested Gift Annuity Rates
 

Following is a summary of the major assumptions on which the suggested January 1, 2012rates are based.

Target Residuum.   Historically, the ACGA has targeted a residuum (the amount realized by the charity upon termination of an annuity) of 50% of the original contribution for the gift annuity. The new rate schedules retain the 50% target residuum, and continue the requirement first applied for the July 2011 rate schedules that the present value (PV) of the residuum be at least 20% of the original contribution for the annuity.

The 20% minimum PV requirement has the effect of reducing rates for annuitants age 57 and under. It is designed to help charities realize a minimum value from gifts whose residua will not be realized for many years. Rates for younger annuitants (ages 5 to 49) were reduced as necessary to comply with the 10% minimum charitable deduction required under IRC Sec. 514(c)(5)(A) using the 1.4% CFMR for November 2011. Particularly in low interest rate environments, charities should perform their own deduction calculations and lower their annuity rates if necessary to meet the 10% minimum deduction requirement.

Mortality Assumption.   In calculating suggested rates, all annuitants are assumed to be female and one year younger than their actual ages. The suggested rates use the Annuity 2000 Mortality Tables. The rates also incorporate projections for increasing life expectancies (improvements in mortality) using a scale supplied by our actuary.

Expense Assumption. Annual expenses for investment and administration are 1.0% of the fair market value of gift annuity reserves. The annual expense assumption is unchanged.

Investment Return Assumption. The gross annual expected return on immediate gift annuity reserves is 4.25%. This is a decrease from the 5.0% total return assumption used in calculating the July 2011 rates. The gross expected return for deferred annuity reserves is also 4.25%. Both immediate and deferred payment annuity calculations use a net compounding rate of 3.25%.

Payment Assumption. Annual payments are made in quarterly installments at the end of each period. This assumption is unchanged from the 2011 rate calculations.

The rates for the oldest ages are somewhat lower than the rates that would follow from the above assumptions. Rates are capped at age 90 and above, and rates for annuitants between ages 81 and 89 are graduated downward from the rate cap.

Additional Assumption for Deferred Gift Annuities
 

The annual compound interest rate credited during the deferral period for deferred payment gift annuities is 3.25% (the same investment return assumption as for current gift annuities after subtracting the 1.0% expense assumption). In other words, each dollar contributed for a deferred gift annuity is presumed to grow at an annual compound interest rate of 3.25% between the date of contribution and the annuity starting date.

If payments will be made at the end of the period, which is usually the case, the annuity starting date would be at the beginning of the first period for which a payment is made. For example, if payments will be made quarterly, and the first payment will be made on September 30, 2014, the annuity starting date would be July 1, 2014. If payments will be made semi-annually, the annuity starting date in this case would be April 1, 2014.

Assuming that the annuitant would be nearest age 65 on the annuity starting date, and that the period between the contribution date and the annuity starting date is 10.25 years, the compound interest factor would be 1.032510.25 or 1.387948. To determine the deferred gift annuity rate, this factor is multiplied by the immediate gift annuity rate, now in effect, for the nearest age of the annuitant at the time payments begin. In this example, the deferred gift annuity rate would be 1.387948 times 4.7%, or 6.5% (rounded to the nearest tenth of a percent).

The compounding rate during the deferral period is simply the assumed net return (total assumed return of 4.25% less 1.0% for expenses). The compounding rate applies to the entire compounding period, whatever its length. At times in the past, the compounding rate for periods in excess of 20 years was less than the compounding rate for the first 20 years of the deferral period.

In two states, New York and New Jersey, it is sometimes necessary to apply a slightly lower compounding rate when the deferral period is relatively long in order not to exceed those states’ maximum allowable deferred gift annuity rates. Please see the note below to charities issuing deferred gift annuities in New York and New Jersey. 

Single Life

Age

Rate

 

Age

Rate

 

Age

Rate

5-10

2.0

50

3.7

 

73

5.5

11-15

2.1

51-52

3.8

 

74

5.7

16-19

2.2

53-54

3.9

 

75

5.8

20-23

2.3

55

4.0

 

76

6.0

24-26

2.4

56-57

4.1

 

77

6.2

27-29

2.5

58

4.2

 

78

6.4

30-32

2.6

59

4.3

 

79

6.6

33-34

2.7

60-61

4.4

 

80

6.8

35-36

2.8

62-63

4.5

 

81

7.0

37-38

2.9

64

4.6

 

82

7.2

39-40

3.0

65

4.7

 

83

7.4

41-42

3.1

66-67

4.8

 

84

7.6

43

3.2

68

4.9

 

85

7.8

44-45

3.3

69

5.0

 

86

8.0

46

3.4

70

5.1

 

87

8.2

47

3.5

71

5.3

 

88

8.4

48-49

3.6

 

72

5.4

 

89

8.7

 

 

 

 

 

 

90+

9.0

NOTES:

  1. The rates are for ages at the nearest birthday.

  2. For immediate gift annuities, these rates will result in a charitable deduction of at least 10% if the CFMR is 1.4% or higher and a quarterly payment frequency is used. If the CFMR is less than 1.4%, the deduction will be less than 10% when annuitants are below certain ages.

  3. For deferred gift annuities with longer deferral periods, the rates may not pass the 10% test when the CFMR is low.

  4. To avoid adverse tax consequences, the charity should reduce the gift annuity rate to whatever level is necessary to generate a charitable deduction in excess of 10%.
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 Two Lives - Joint and Survivor

Younger Age Older Age Rate
5 5-95+ 1.8
6 6-95+ 1.8
7 7-95+ 1.8
8 8-95+ 1.8
9 9-95+ 1.8
10 10-95+ 1.8
11 11-95+ 1.9
12 12-95+ 1.9
13 13-95+ 1.9
14 14-95+ 1.9
15 15-95+ 1.9
16 16-95+ 2.0
17 17-95+ 2.0
18 18-95+ 2.0
19 19-95+ 2.0
20 20-95+ 2.1
21 21-95+ 2.1
22 22-95+ 2.1
23 23-95+ 2.1
24 24-95+ 2.1
25 25-95+ 2.2
26 26-95+ 2.2
27 27-95+ 2.2
28 28-95+ 2.2
29 29-95+ 2.3
30 30-95+ 2.3
31 31-95+ 2.3
32 32-95+ 2.3
33 33-95+ 2.4
34 34-95+ 2.4
35 35-95+ 2.4
36 36-95+ 2.5
37 37-95+ 2.5
38 38-95+ 2.5
39 39-95+ 2.6
40 40-95+ 2.6
41 41-95+ 2.7
42 42-95+ 2.7
43 43-95+ 2.8
44 44-95+ 2.8
45 45-95+ 2.9
46 46-95+ 2.9
47 47-50 3.0
47 51-95+ 3.1
48 48 3.0
48 49-95+ 3.1
49 49-51 3.1
49 52-95+ 3.2
50 50 3.1
50 51-53 3.2
50 54-95+ 3.3
51 51-52 3.2
51 53-55 3.3
51 56-95+ 3.4
52 52-54 3.3
52 55-95+ 3.4
53 53-55 3.4
53 56-58 3.5
53 59-95+ 3.6
54 54 3.4
54 55-57 3.5
54 58-95+ 3.6
55 55 3.5
55 56-58 3.6
55 59-61 3.7
55 62-95+ 3.8
56 56-57 3.6
56 58-59 3.7
56 60-62 3.8
56 63-95+ 3.9
57 57-58 3.7
57 59-63 3.8
57 64-95+ 3.9
58 58-61 3.8
58 62-65 3.9
58 66-95+ 4.0
59 59-60 3.8
59 61-63 3.9
59 64-68 4.0
59 69-95+ 4.1
60 60-62 3.9
60 63-66 4.0
60 67-70 4.1
60 71-95+ 4.2
61 61 3.9
61 62-64 4.0
61 65-68 4.1
61 69-95+ 4.2
62 62-63 4.0
62 64-66 4.1
62 67-69 4.2
62 70-95+ 4.3
63 63-64 4.1
63 65-67 4.2
63 68-95+ 4.3
Younger Age Older Age Rate
64 64-66 4.2
64 67-70 4.3
64 71-95+ 4.4
65 65 4.2
65 66-68 4.3
65 69-72 4.4
65 73-95+ 4.5
66 66-67 4.3
66 68-71 4.4
66 72-75 4.5
66 76-95+ 4.6
67 67-69 4.4
67 70-73 4.5
67 74-95+ 4.6
68 68 4.4
68 69-71 4.5
68 72-75 4.6
68 76-95+ 4.7
69 69-70 4.5
69 71-73 4.6
69 74-76 4.7
69 77-95+ 4.8
70 70-71 4.6
70 72-74 4.7
70 75-78 4.8
70 79-95+ 4.9
71 71-73 4.7
71 74-75 4.8
71 76-79 4.9
71 80-82 5.0
71 83-95+ 5.1
72 72 4.7
72 73-74 4.8
72 75-76 4.9
72 77-79 5.0
72 80-83 5.1
72 84-95+ 5.2
73 73 4.8
73 74-75 4.9
73 76-77 5.0
73 78-80 5.1
73 81-83 5.2
73 84-95+ 5.3
74 74 4.9
74 75-76 5.0
74 77-78 5.1
74 79-80 5.2
74 81-83 5.3
74 84-87 5.4
74 88-95+ 5.5
75 75 5.0
75 76-77 5.1
75 78 5.2
75 79-81 5.3
75 82-83 5.4
75 84-86 5.5
75 87-95+ 5.6
76 76-77 5.2
76 78-79 5.3
76 80-81 5.4
76 82-83 5.5
76 84-85 5.6
76 86-88 5.7
76 89-95+ 5.8
77 77-78 5.3
77 79 5.4
77 80-81 5.5
77 82-83 5.6
77 84-85 5.7
77 86-87 5.8
77 88-91 5.9
77 92-95+ 6.0
78 78 5.4
78 79 5.5
78 80-81 5.6
78 82-83 5.7
78 84 5.8
78 85-86 5.9
78 87-89 6.0
78 90-92 6.1
78 93-95+ 6.2
79 79-80 5.6
79 81 5.7
79 82 5.8
79 83-84 5.9
79 85-86 6.0
79 87-88 6.1
79 89-90 6.2
79 91-93 6.3
79 94-95+ 6.4
Younger Age Older Age Rate
80 80 5.7
80 81 5.8
80 82 5.9
80 83-84 6.0
80 85 6.1
80 86-87 6.2
80 88-89 6.3
80 90-91 6.4
80 92-93 6.5
80 94-95+ 6.6
81 81 5.9
81 82 6.0
81 83 6.1
81 84-85 6.2
81 86 6.3
81 87-88 6.4
81 89 6.5
81 90-91 6.6
81 92-94 6.7
81 95+ 6.8
82 82 6.1
82 83 6.2
82 84 6.3
82 85-86 6.4
82 87 6.5
82 88 6.6
82 89-90 6.7
82 91 6.8
82 92-93 6.9
82 94-95+ 7.0
83 83 6.3
83 84 6.4
83 85 6.5
83 86 6.6
83 87 6.7
83 88-89 6.8
83 90 6.9
83 91 7.0
83 92-93 7.1
83 94-95+ 7.2
84 84 6.5
84 85 6.6
84 86 6.7
84 87 6.8
84 88 6.9
84 89 7.0
84 90 7.1
84 91 7.2
84 92-93 7.3
84 94-95+ 7.4
85 85 6.7
85 86 6.9
85 87 7.0
85 88 7.1
85 89 7.2
85 90 7.3
85 91 7.4
85 92 7.5
85 93-95+ 7.6
86 86 7.0
86 87 7.1
86 88 7.3
86 89 7.4
86 90 7.5
86 91 7.6
86 92 7.7
86 93-95+ 7.8
87 87 7.3
87 88 7.4
87 89 7.5
87 90 7.7
87 91 7.8
87 92 7.9
87 93-95+ 8.0
88 88 7.6
88 89 7.7
88 90 7.9
88 91 8.0
88 92 8.1
88 93-95+ 8.2
89 89 7.9
89 90 8.0
89 91 8.2
89 92 8.3
89 93-95+ 8.5
90 90 8.2
90 91 8.4
90 92 8.5
90 93 8.7
90 94-95+ 8.8
91 91 8.6
91 92 8.7
91 93-95+ 8.8
92 92-95+ 8.8
93 93-95+ 8.8
94 94-95+ 8.8
95+ 95+ 8.8

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Procedure for Calculating Suggested Deferred Gift Annuity Rates

(New York & New Jersey see note below)

  1. Determine the annuity starting date, which is:
    One year before the first payment, if payments are made annually.
    Six months before the first payment, if payments are made semi-annually.
    Three months before the first payment, if payments are made quarterly.
    One month before the first payment, if payments are made monthly.

  2. Determine the number of whole and fractional years from the date of the contribution to the annuity starting date (the deferral period). Express the fractional year as a decimal of four numbers.

  3. For a deferral period of any length, use the following formula to determine the compound interest factor:
    F = 1.0325 d, where
    F is the compound interest factor and
    d is the deferral period

    Example: If the period between the contribution date and the annuity starting date is 14.5760 years, the compound interest factor would be 1.032514.576 = 1.593902

  4. Multiply the compound interest factor (F) by the immediate gift annuity rate for the nearest age or ages of a person or persons at the annuity starting date.
    Example: If the sole annuitant will be nearest age 65 on the annuity starting date and the compound interest factor is 1.593902 , the deferred gift annuity rate would be 1.593902 times 4.7% , or 7.5% (rounded to the nearest tenth of a percent).

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Note to Charities Issuing Deferred Gift Annuities in New York and New Jersey*
Approved by the American Council on Gift Annuities on November 7, 2011 - Effective January 1, 2012

Through August of 2012 the following compound interest factors during the deferral period noted will satisfy the requirements of New York and New Jersey.

For all deferral periods:
Single-life and two-life annuities, whatever the gender of the annuitants, a compound interest factor of 3.25%.

*New York & New Jersey are the two states known at this time that may require different interest factors for deferred gift annuities with longer deferral periods.

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