Analysis of the New 2023 ACGA Annuity Rates

On November 23, 2022, the American Council on Gift Annuities announced that it would be increasing its suggested maximum annuity rates, effective January 1, 2023 (the “new rates”). We now know the details of the new rates, which the ACGA made public on December 19, 2022. The new rates replace the rates that became effective July 1, 2022 (the “current rates”). The ACGA’s decision to increase its suggested maximum gift annuity rates was triggered by the sharp rise in interest rates that started in March and has continued since July. 

New York Maximum Annuity Rates Higher than ACGA Rates in Q4 2022

As was true for the last quarter, there is good news for charities that issue annuities in New York! The maximum annuity rates allowed by New York for gift annuities issued to a New York donor in the fourth quarter of 2022 increased modestly from their third quarter levels. Consequently, as in the third quarter, New York’s maximum single-life annuity rates for Q4 2022 are higher than the corresponding ACGA rates for all male and female ages. This means charities can offer the ACGA rate to New York donors of single-life annuities funded from October 1, 2022 to December 31, 2022, regardless of the annuitant’s age and gender.

Beware CGA Rate Shoppers

The rate to be offered to your interested donor, per your organization’s policies, is 6.5%. So what do you do if your donor asks if you can go a little higher, maybe a rate of 6.8%? And then lets you know that another charity is willing to offer that? How do you suppress the urge to waive your policy in order to not “lose” the gift, particularly since these situations often arise in the context of an exceptionally large contribution amount – which is precisely when you don’t want to increase the risk to your organization? To help stamp out the urge to participate in rate shopping, it helps to understand how policy decisions affect your program, and the impact bumping up your rates can have on its success.

Good News About New York Maximum Annuity Rates for Q3 2022

There is good news for charities that issue annuities in New York! The maximum annuity rates allowed by New York for gift annuities issued to a New York donor in the third quarter of 2022 increased significantly from their second quarter levels. They increased enough, in fact, that New York’s maximum single-life annuity rates for Q3 2022 are higher than the corresponding ACGA rates for all male and female ages, even though the ACGA suggested maximum rates increased as of July 1. This means charities can offer the ACGA rates to New York donors of single-life annuities funded from July 1, 2022 to September 30, 2022, regardless of the annuitant’s age and gender.