Pension-plan participants often receive toolittle information when they’re offered a lump-sumpayment that replaces their lifetime benefits, accordingto a report from the Government Accountability Office.

Sponsors, especially those with underfundedpensions, have been turning to lump-sumpayments in greater numbers in the past few years,prompting Rep. Sander Levin, D-Michigan, ranking member of theHouse Committee of Ways and Means, and Rep. George Miller,D-California, who’s now retired, to ask the GAO to review thetrend.

Consumer advocates say participants potentially face a reductionin their retirement assets when they accept a lump-sum offer.Also, participants who assume management of their lump-sum paymentoften face potential investment challenges. And some participantsmay not continue to save their lump-sum payment for retirement butinstead 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.