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Annuity Reserves

Annuity reserves are the assets a charity needs in order to finance its gift annuity payment obligations. The amount of reserves needed to finance each gift annuity depends on the size of the annuity payments, the ages of the annuitants, and the mortality table and interest rate used.

Many charities compute annuity reserves for their own internal purposes to make sure that they have ample funds on hand to make annuity payments now and in the future.

Some states that regulate gift annuities require charities that issue gift annuities in their state to submit annuity reserve reports annually.  They do so to ensure that the charities are maintaining adequate reserves to finance their annuities. 

Mortality tables:  As shown below, the states that require annuity reserve reports began requiring use of the Annuity 2000 mortality table for gift annuities issued starting in the late 1990s or early 2000s. The National Association of Insurance Commissioners adopted the Annuity 2000 table in 1996 as an appropriate table for valuing annuity interests. The 1983 A mortality table is acceptable in these states for use with gifts made prior to the dates shown.

Use of Annuity 2000 mortality table

State

Gifts on or after

Washington

July 1, 1998

Arkansas

July 1, 1998 (for use in Option 3 method, see below)

Florida

July 1, 1998 (effective for valuations on or after October 1, 2002)

Wisconsin

January 1, 1999

New York

January 1, 2000 - December

Maryland

January 1, 2000 (MD accepts NY reserve valuations)

Oregon

January 1, 2001

New Jersey

January 1, 2001

Hawaii

All gifts (effective for valuations on or after July 1, 2004)

California

January 1, 2005

 

Use of 2012 IAR mortality table

As shown below, many states have adopted the 2012 IAR mortality table for computing minimum annuity reserves for gift annuities issued on or after January 1, 2015. Only California and Hawaii have explicitly not adopted 2012 IAR for computing minimum annuity reserves for new gift annuities. As of April 18, 2014, Wisconsin has largely de-regulated gift annuities and no longer requires a minimum gift annuity reserves.

State

Gifts on or after

Washington

January 1, 2015

Arkansas

January 1, 2015 (for use in Option 3 method, see below)

Florida

January 1, 2015

New York

January 1, 2015

Maryland

January 1, 2015 (MD accepts NY reserve valuations)

Oregon

January 1, 2015

New Jersey

January 1, 2015

 

 

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