At its meeting on April 5, 2006 in San Francisco, immediately prior to the ACGA conference, the ACGA board approved the recommendation of the Gift Annuity Rates Committee to CONTINUE the CURRENT immediate gift annuity rates (established on 7-1-03) for another year. However, for deferred payment gift annuities, the compounding rate will increase from 5.0% to 5.25%.
Unless unforeseen circumstances should necessitate an interim adjustment, these rates will remain in effect at least THROUGH June 30, 2007.
A detailed 20-page paper providing an explanation of the rates and fund earnings assumptions, as well as the reasons for the board action, was provided to conference participants. It is now available from the ACGA, see link below.
The paper begins with a discussion of historical gift annuity rates. Next, it explains the assumptions underlying the rates and provides a rationale for EACH of them, (including the gift residuum, life expectancy, expenses, investment returns, and asset allocation.) Then it compares gift annuity rates with those offered by insurance companies (“commercial rates”). Finally, it shows why it is prudent for charities NOT to exceed the recommended maximum rates.
Assumptions for ACGA Suggested Maximum Gift Annuity Rates (7-1-06):
| Asset Allocation: |
Equities: |
40 %
|
|
Bonds: |
55 % (10 Year Treasury Bonds)
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|
Cash: |
5 %
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Average Annual Total Return: (See ACGA Paper for details):
|
|
Equities: |
9.00 %
|
|
Bonds: |
4.50 %
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|
Cash: |
4.22 %
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To order the paper: "2006 Presentation on Gift Annuity Rates" ... Go to: www.acga-web.org/orderform07.pdf
A complete report on the 2006 ACGA suggested gift annuity rates is available to our sponsors at no charge in our online Sponsors’ Forum section. A hard copy of the report is available for purchase, please Contact Us.
Click here to access the Sponsors’ Forum
Click here for the ACGA order form
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