Credit Card Sir’s Perspective: More employers are offering lump-sum payouts instead of lifetime annuity payments, even to retirees who left them years ago. However, this isn’t really a win-win situation.

As workers head off into retirement, many pension plans offer them a choice between a lump-sum benefit and a lifetime of annuity payments. Now a growing number of employers are offering lump sums to people who left the company years ago — including retirees currently getting monthly pension benefits.

Employers are using lump-sum offers to current retirees as a way to reduce their risk as their pension obligations bounce around with market shifts and interest-rate changes, and to reduce the cost of operating their defined-benefit plans. The same factors, though, that now make lump sums more attractive to employers are making them less beneficial to retirees. Under a recent rule change, administrators may calculate lump-sum payouts using corporate bond rates instead of the 30-year Treasury rates previously used. All else being equal, the shift to a higher interest rate will result in a lower lump-sum payout.

Plan administrators generally use average life expectancy to translate benefits into a lump sum. That tips the scales toward a lump sum for people in very poor health and toward an annuity for those in average or better health. Women, who have a longer average life expectancy than men, should be particularly wary of taking a lump sum. And married retirees, who often have annuities that provide benefits for a surviving spouse, may find it a challenge to stretch a lump-sum payout over both spouses’ life expectancies.

With an employer annuity, you could combine your monthly pension benefits with Social Security and any other steady sources of income to cover your basic expenses, giving you the option to invest more aggressively in your IRA or other savings vehicles. But investing a lump sum in hopes of generating more income than the annuity comes with significant stock-market risk.

If, however, you’re already generating enough income, a lump sum offers more flexibility. The money is generally rolled into an IRA, and the retiree can draw more cash from the account when income tax rates are lower, and less when they’re higher. And unlike with an annuity, leftover money from a lump sum can be passed down to heirs.

Most retirees switching to a lump sum will need a bulletproof drawdown strategy that lets them tap enough cash to cover expenses without depleting their nest egg. That could mean buying an immediate annuity on your own. Caveat: With current annuity rates, a pile of cash may not purchase the same guaranteed lifetime income stream that you’d get through monthly benefits from your former employer. (To check the annuity value of your lump sum, go to www.immediateannuities.com.)