ACGA deferred annuity interest factors for New Jersey and New York
New Jersey and New York are the two states known to set their own maximum gift annuity rates independent of the ACGA's recommendations. While the ACGA rates for immediate payment gift annuities have always been in compliance with New Jersey and New York maximums, in some years, the ACGA has determined that its formula for determining suggested maximum deferred gift annuity rates may result in rates that are higher than those allowed in New York and New Jersey. In these years, the ACGA has published a separate set of deferred annuity interest rates for use with New York and New Jersey annuities only. The purpose of these interest rates has been to assure that the rates suggested by the ACGA do not exceed the separate maximum annuity rates set by these states.
A deferred interest factor is used to calculate the maximum deferred gift annuity rates suggested by the American Council on Gift Annuities for all states. The maximum deferred gift annuity rate equals the suggested rate from the ACGA's one-life or two-life table for the age(s) of the annuitant(s) on the annuity starting date multiplied by the deferred interest factor determined as follows:
For deferral periods of any length, the factor equals deferred interest factor raised to the exact number of years from the date of gift to the annuity starting date.
For example, if the deferred interest rate is 5.0% and the number of years from the date of gift to the annuity starting date is ten, the deferred interest factor will be:
1.05 ^ 10 = 1.6289
If the ACGA rate on the annuity starting date is 7.0%, then the ACGA suggested maximum rate for the annuity is:
1.6289 x 7.0% = 11.4023%
Rounding to the nearest 0.1%, the ACGA rate is 11.4%
Factors for use in New York and New Jersey for 2 female annuitants adopted 10/23/2006
These factors superceded the factors for two female annuitants published on May 22, 2006 (see below). For deferral periods of 10 years or more, they are lower than the 5.25% that the ACGA adopted for determining deferred annuity rates for deferred annuities established on or after July 1, 2006.
Years in Deferral Period Interest
5 or less 5.25%
More than 5, up to 10 5.25%
More than 10, up to 20 4.65%
More than 20 4.00%
Factors for use in New York and New Jersey adopted 5/22/2006
These factors are generally lower than the 5.25% that the ACGA adopted for determining deferred annuity rates for deferred annuities established on or after July 1, 2006. The interest factors depend on the length of deferral and the number and gender of the annuitants, as shown in the table below.
|
|
Single Life |
Two Lives |
|||
|
Years in Deferral Period |
Male |
Female |
Male/Female |
Male/Male |
Female/Female |
|
5 or less |
5.25% |
5.25% |
5.25% |
5.25% |
5.25% |
|
More than 5, up to 10 |
5.25% |
5.25% |
5.25% |
5.25% |
5.00% |
|
More than 10, up to 20 |
5.15% |
4.75% |
4.80% |
5.00% |
4.65% |
|
More than 20 |
4.25% |
4.00% |
4.05% |
4.20% |
4.00% |
Factors for use in New York and New Jersey adopted 9/2003
In September 2003, the ACGA published special lower deferred interest rates for use with annuities deferred more than 20 years and benefitting two female annuitants, one female and one male annuitant where the female annuitant is "significantly younger" than the male annuitant, one single female annuitant, or one female and one male annuitant. All New Jersey and New York annuities deferred less than 20 years, or deferred more than 20 years and benefitting other annuitant combinations, could use the ACGA's standard 5.0% deferred interest rate for all years of deferral, effective 7/1/2003.
Two female annuitants or one female and one male annuitant where the female annuitant is "significantly younger" than the male annuitant
For annuities deferred more than 20 years where the annuitants are two females or one female and one male where the female is "significantly younger" than the male, a net rate of return per annum of 4.8% is applied to all years in the deferral period
One single female annuitant or one female and one male annuitant
For annuities deferred more than 20 years where the annuitants are one single female annuitant or one female and one male annuitant, a net rate of return per annum of 4.9% is applied to all years in the deferral period.
Factors for use in New York and New Jersey effective 7/1/2002
Except for the deferred annuity interest factors for deferral periods over 20 years, these rates are identical to the ACGA rates that became effective on July 1, 2002.
Years in Deferral Period Interest
Up to 20 5.75%
More than 20 5.25%
A net rate of return per annum of 5.25% is applied to all years in deferral periods over 20 years, yielding a substantially lower interest factor in the NY/NJ table than in the standard table.
Factors for use in New York and New Jersey effective 7/1/2001
Except for the deferred annuity interest factors for deferral periods over 20 years, these rates are identical to the ACGA rates that became effective on July 1, 2001.
Years in Deferral Period Interest
Up to 20 5.75%
More than 20 5.25%
A net rate of return per annum of 5.25% is applied to all years in deferral periods over 20 years, yielding a substantially lower interest factor in the NY/NJ table than in the standard table.
Factors for use in New York and New Jersey adopted 4/18/1999
Except for the deferred annuity interest factors for deferral periods over 19 years, these rates are identical to the ACGA rates that became effective on July 1, 1999. The interest factors for deferral periods of 19 years or longer are substantially lower than the standard ACGA interest factors that became effective on 7/1/1999.
The ACGA published a table of New York and New Jersey deferred interest factors for deferral periods of up to 40 years without identifying the interest rate assumptions underlying the factors.
This is the table of factors:
