Gift annuity reserve calculations for flexible gift annuities
The method for computing reserves for flexible gift annuities (FGAs) depends on whether or not the annuitant has elected an annuity starting date as of the reserve valuation date. If the annuitant has elected a date of first payment as of this date, the reserve calculation is the same as it is for a standard deferred gift annuity with the same date of first payment and annuity rate. GiftWrap can perform this reserve calculation correctly as long as the elected date of first payment and the annuity rate that goes with it are entered in the Gift Information screen for the gift.
If the annuitant has not elected a date of first payment as of this date, the minimum reserve equals the highest reserve calculated among all of the elective combinations of date of first payment and annuity rate. The New York Department of Insurance has made this approach an explicit requirement in its instructions on computing annuity reserves. Since GiftWrap stores only one date/rate pair at a time, the way to determine the minimum reserve for a flexible gift annuity with absolute certainty is to compute the reserve for a deferred gift annuity based on each elective date/rate pair and determine the greatest reserve among the results. In many cases, the earliest date of first payment and annuity rate will result in the greatest reserve.
All of a flexible gift annuity's elective payment start dates and associated payment rates may be stored in the Flexible GA Details tab on the Gift Information screen. To perform a gift annuity reserve calculation for any date/rate pair, you may copy them from this tab to the First Payment Date and Payout % fields in the General tab on the Gift Information screen.
If your charity's flexible gift annuities where the annuitant has not yet elected a date of first payment represent only a small fraction of your total pool of annuities, it may be sufficient to enter the earliest date of first payment and annuity rate in the General tab of the Gift Information screen for each of them and run your reserve report based on that data. If these flexible gift annuities represent more than a small fraction of your total pool of annuities, you should consider computing the reserve for the largest of them based on all possible combinations of date of first payment and annuity rate. Then, enter the combination that yields the greatest reserve for each gift as the date of first payment and annuity rate in the gift's Gift Information screen. When done adjusting these values for these flexible gift annuities, run the reserve report. You need to re-evaluate these flexible gift annuities annually, as the date of first payment and annuity rate with the greatest minimum reserve can change over time.
You can indicate whether or not an annuitant of a flexible gift annuity has elected a date of first payment using the Payment Date Elected check box on the Details tab of the Gift information page.
Custom filter to list all FGAs where the annuitant has not elected a date of first payment:
gift.subtypeid = 8 AND gift.paymentdateelected = 0
Custom filter to exclude only FGAs where the annuitant has not elected a date of first payment:
gift.subtypeid <> 8 OR gift.paymentdateelected = 1