ACGA Announces New Lower Gift Annuity Rates

The Board of Directors of the American Council on Gift Annuities (ACGA) announced that gift annuity rates will change on January 1, 2012. The new rates will be 0.5% to 0.8% lower than the previous schedule. To view the new rates, please click here.

The primary factor in reducing the rates is a lower yield on the ten-year Treasury bond. During the past year, the yield changed from 3.3% in January to below 2.0% in October. With the ongoing issues over the Euro, there is a continued cash "flight to safety" of Treasury bonds. Because the ACGA gift annuity reserve portfolio assumes 40% equities, 55% bonds or fixed income and 5% cash, a reduction in bond yields changes the total assumed return.

The new assumed return will be 4.25% with a 1% load, for a net return of 3.25%.The new rates will pass the Sec. 514(c)(5) minimum 10% charitable deduction test. The rates maintain the 50% residuum and 20% present value requirement. The top rate for a single life gift annuity for persons age 95 and older is 9.0%.

Editor's Note from Charles Schultz: In a time of great changes in interest rates, the ACGA Board has been responsible in updating rates. While everyone hopes that rates will be stable for the future, it is important for both donors and charities (who will receive the residuum) that gift annuity rates are fair and realistic. With the continued low CD rates, 2012 gift annuities for our senior friends are extremely attractive.