A risk reduction strategy that many organizations use for terminated vested participants or retirees of...

Offering lump sum payouts removes long-term liabilities and actuarial risk for the company. It allows participants to take full control, and organizations to reduce future plan obligations.

Extract from HRCI-aligned HR knowledge (Total Rewards):

SPHR knowledge includes “risk mitigation in legacy retirement plans,” and identifies de-risking strategies such as lump sum offerings to reduce exposure to market fluctuations and longevity risk.