According to the latest data by the Bureau of Labor Statistics, among private industry workers in defined contribution plans, most participated in savings and thrift plans (73%) (source). Other common plan types include deferred profit sharing (25%) and money purchase pensions (18%). A lump sum was the most common payment option available to workers in these plans.
A lump sum provides retiring workers the full amount of their retirement savings and earnings with no further benefits received from the plan. Annuity payments were available to 29% of participants in money purchase pension plans. That was more than the share of workers who could receive an annuity in savings and thrift plans (12%) or in deferred profit-sharing plans (9%). Annuity payments provide a periodic (usually monthly) payment for the life of the retiree. With installment payments, the retiree receives part of the account balance in regular payments until the balance reaches zero. If the account balance is greater than zero when the retiree dies, the retiree’s beneficiaries receive the balance. Installment payments may occur monthly, quarterly, or yearly for 5 to 20 years.