Pension-plan participants often receive too little information when they’re offered a lump-sum payment that replaces their lifetime benefits, according to a report from the Government Accountability Office.
Sponsors, especially those with underfunded pensions, have been turning to lump-sum payments in greater numbers in the past few years, prompting Rep. Sander Levin, D-Michigan, ranking member of the House Committee of Ways and Means, and Rep. George Miller, D-California, who’s now retired, to ask the GAO to review the trend.
Consumer advocates say participants potentially face a reduction in their retirement assets when they accept a lump-sum offer. Also, participants who assume management of their lump-sum payment often face potential investment challenges. And some participants may not continue to save their lump-sum payment for retirement but instead may spend some or all of it.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
