New York Maximum Annuity Rates Have Increased Significantly
Published by
Bill Laskin
on
(Updated February 13, 2024) Governor Hochul signed New York Bill A4599a on October 25, 2023. The new law revises how New York computes its maximum annuity rates for gift annuities issued to New York residents and went into effect 90 days after signing, which is to say, on January 23, 2024. New York has now published the maximum rates applicable for gift annuities funded January 1, 2024 – January 22, 2024, during which the old method still applies, and for gift annuities funded January 23, 2024 – June 30, 2024, during which the new method applies. (The new law calls for updating the New York rates semiannually rather than quarterly.)
As expected, switching to the new method increases New York’s maximum annuity rates significantly. The table below compares old and new New York maximum rates with American Council on Gift Annuities (ACGA) suggested maximum annuity rates over a range of typical gift annuitant ages. The columns on the far right show that New York’s new single life maximum rates are consistently about 1.5% higher than its old rates for females and anywhere from 1.6% to 3.6% higher than the corresponding ACGA rates.
| Age | ACGA Rate | Old NY Rate (Male) | Old NY Rate (Female) | New NY Rate (Unisex) | Increase vs. Old NY Female Rate | Increase vs. ACGA Rate |
| 70 | 6.3% | 6.827% | 6.642% | 8.104% | 1.462% | 1.804% |
| 75 | 7.0% | 7.557% | 7.271% | 8.722% | 1.451% | 1.722% |
| 80 | 8.1% | 8.708% | 8.274% | 9.723% | 1.449% | 1.623% |
| 85 | 9.1% | 10.565% | 9.862% | 11.324% | 1.462% | 2.224% |
| 90 | 10.1% | 13.512% | 12.218% | 13.696% | 1.478% | 3.596% |
We also tested a range of two-life immediate annuity rates and one-life and two-life deferred annuity rates. In every case, we found New York’s new maximum rate to be at least 1.7% greater than the corresponding ACGA rate.
So, it looks like the new method for computing New York maximum annuity rates has eliminated all conflicts with the ACGA rates, at least through June 30, 2024. That is great news for charities that follow the ACGA rates and issue gift annuities to New York residents! Their fundraisers can be confident that they can offer ACGA rates to their New York donors without risk of violating New York maximums. We expect this state of affairs to continue beyond June 30, but will confirm that is the case when New York posts updated rates in early July.
New York Reserve Calculations Not Affected: Please note, the new law does not change any of the rules for computing New York annuity reserves. In particular, the maximum allowable interest rates still will be determined the same way and updated quarterly, and reserve amounts will still depend on the gender of the annuitant(s).
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