Posted May 1st, 2006

Gift Annuity Rates Unchanged

At the 27th Conference on Gift Annuities held this spring in San Francisco, California, the American Council on Gift Annuities announced its recommendation for rates to take effect July 1, 2006.

The ACGA board voted not to change the recommended payment rates for immediate gift annuities, therefore current immediate gift annuity rates will remain in effect at least through June 30, 2007. For deferred gift annuities, the board approved a change in the assumed compound interest rate from 5% to 5.25%.

The assumed total annual return on gift annuity reserves was also increased .25% to 6.25%. However, this did not lead to an increase in current gift annuity rates.

It has long been assumed that planned giving donors live longer than the general population. For this reason, female life expectancies (used to calculate rates for all gift annuitants) in the past have been set back 1 1⁄2 years from the life expectancy of the average American woman. As part of this year’s review, based upon analysis of Annuity 2000 Mortality Tables, the ACGA authorized changing the age setback to 2 years. Because of the interplay between the increased life expectancy assumption and the expected higher investment returns, the assumed residuum, or the amount remaining to the charitable entity once the annuity payments have ended, was not changed and remains at 50%.

For more information

This year’s recommendations are based upon extensive review and analysis that included expert assistance from actuaries and representatives of financial institutions. The adjustment that affects the compounding rate for deferred gift annuities will take effect on July 1, 2006.

Additional information about charitable gift annuities and the recommended rates may be obtained from:

American Council on Gift Annuities
Gloria Kermeen, ACGA Administrator
233 McCrea Street, Suite 400
Indianapolis, IN 46225
Voice: (317) 269-6271 • Fax: (317) 269-6276
acga@acga-web.org

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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