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ACGA Maximum Suggested Rates Remain the Same as of 11/3/14

RatesSliderAt its semi-annual meeting on November 3, 2014, the Board of Directors of the American Council on Gift Annuities (ACGA) voted to reaffirm the existing schedule (originally published on January 1, 2012) of suggested maximum rates for charitable gift annuities.

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.  We also evaluate annuitant mortality and other assumptions as appropriate.

The ACGA uses the results of a study of gift annuitant mortality study it commissioned in 2010 when calculating a schedule of suggested gift annuity rates.  We do this because historically charitable gift annuitants have been shown to have longer life expectancies than both the general public and the population of individuals who purchase commercial annuities.

The 2010 gift annuity mortality study analyzed data from over 47,000 gift annuity contracts in force during the years 2005-2009.  We expressed the results of the gift annuitant mortality study in terms of the Annuity 2000 mortality tables, the latest tables available at the time.  Specifically, the ACGA assumes that every gift annuitant will have a life expectancy (determined according the Annuity 2000 mortality tables) equal to that of a female who is one year younger than the annuitant.

Beginning January 1, 2015, several state departments of insurance will require the use of a new mortality table when calculating required reserves for charitable gift annuities.  The new mortality table, called the 2012 Individual Annuity Reserve Table (2012 IAR Table), follows the Annuity 2000 mortality table.  The latter will continue to be used for calculating reserves for gifts made in prior years, while the new (2012 IAR) table will be used to calculate reserves for new gifts starting in 2015.  The ACGA has contracted with its consulting actuaries, Hay Group, to re-interpret the results of the 2010 gift annuitant mortality study in terms of the updated 2012 IAR Table.  We anticipate publishing any change to our stated mortality assumption in the next Rates Paper.

For more detailed information about our suggested gift annuity rates, please visit the gift annuity rates section of our website to obtain a copy of our latest Rates Paper.

David Libengood
ACGA Rates Committee