Often, the decision to take a pension annuity option over an available lump sum option rests on which option provides the greatest income. And that makes perfect sense if all of the other factors relating to this decision are excluded from the due diligence process.
But when considering all the factors that accompany this decision, whether to take a pension annuity option over an available lump sum option becomes more about control than it does the amount of the payment.
The Problems with Pensions
Today we are seeing fewer pensions than we did 20 years ago, and there is a reason for this downward trend. The truth is that pensions are facing systemic problems, which is why we see private sector companies replacing these defined benefit plans with defined contribution plans, such as 401(k)s.