Manager – calls PG Calc Support and asks if there is something wrong with the calculations for deferred charitable gift annuities. “How can the payout rates possibly be as high as 15 or 20% - surely that’s a mistake! Is there something wrong with the software? If not, then, does anybody really write these annuities?”
It turns out there is nothing wrong with the software – the payout rates, as they are expressed, are correct. And yes, charities really do issue these annuities. The problem is in the way the payout rates are quoted. There is an enormous difference between the nominal payout rate of a deferred gift annuity and the effective payout rate of a deferred gift annuity. Let’s take a closer look at how these payout rates work and try to make some sense of it.