ACGA Report on Progress in Resolving Gift Annuity Rate Challenges in New York State
News

The American Council on Gift Annuities (ACGA) is pleased to share our progress in working with regulators in New York State regarding maximum allowable charitable gift annuity payout rates.

Background:

The ACGA has promulgated suggested maximum payout rates since 1927 to provide 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, NYDFS has recently implemented a new methodology that causes its maximum allowable payout rates to be adjusted quarterly and, for some donors, to be substantially lower than the ACGA suggested rates. 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. New York is the only state to promulgate maximum allowable payout rates. Their rates tables can be found here. 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.

Solution:

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. Our next step will be to work with New York State legislators to implement the change to the statutes.

We have been working hard on behalf of our member organizations behind the scenes with NYDFS and will update you as we proceed with the Legislature. This type of advocacy highlights the importance of the ACGA and the support of our members and sponsors.

ACGA Member update as of 7/13/21:

On July 7, Assembly Member Kevin Cahill introduced AB 8164, which would allow charities to use a single table of unisex annuity rates. It also revises the criteria for determining New York’s maximum annuity rates in a way that makes it very unlikely New York’s rates will continue to be lower than the ACGA’s suggested maximum rates for any one-life or two-life annuity.

The introduction of AB 8164 is a critical step toward updating New York’s insurance law so that charities can offer ACGA rates to all New York donors.

New York legislators are not scheduled to convene again until January, so we think it is most likely that AB 8164 will be adopted then. The revised statute will take effect 90 days after it becomes law. In the meantime, charities issuing gift annuities to New York residents should continue to use the rates promulgated by the New York Department of Financial Services


This latest progress demonstrates the benefit of a strong ACGA that can advocate effectively for its members and sponsors. We will continue to update members as events unfold.

Thank you to all our ACGA members and sponsors for the support that makes our advocacy on your behalf possible. If you are not an ACGA member, please consider becoming one.  Your support will help the ACGA continue to promote responsible philanthropy.

Last Updated on Tuesday, July 13, 2021 11:42 AM