A lump sum is a single payment of
money
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...
, as opposed to a series of payments made over time (such as an
annuity
In investment, an annuity is a series of payments made at equal intervals.Kellison, Stephen G. (1970). ''The Theory of Interest''. Homewood, Illinois: Richard D. Irwin, Inc. p. 45 Examples of annuities are regular deposits to a savings account, ...
).
The
United States Department of Housing and Urban Development
The United States Department of Housing and Urban Development (HUD) is one of the executive departments of the U.S. federal government. It administers federal housing and urban development laws. It is headed by the Secretary of Housing and Ur ...
distinguishes between "
price analysis
Price analysis is the study of how a price relates to other things such as product demand. Its specfici meaning varies in contexts such as marketing and general business.
Marketing
In marketing, price analysis refers to the analysis of consum ...
" and "
cost analysis
In Production (economics), production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one o ...
" by whether the decision maker compares lump sum amounts, or subjects contract prices to an itemized cost breakdown.
[
]
In 1911, American union leaders including
Samuel Gompers
Samuel Gompers (; January 27, 1850December 13, 1924) was a British-born American cigar maker, labor union leader and a key figure in American labor history. Gompers founded the American Federation of Labor (AFL) and served as the organization's ...
of the
American Federation of Labor
The American Federation of Labor (A.F. of L.) was a national federation of labor unions in the United States that continues today as the AFL-CIO. It was founded in Columbus, Ohio, in 1886 by an alliance of craft unions eager to provide mutu ...
expressed opposition to lump sums being awarded to their members pursuant to a new workers compensation law, saying that when they received lump sums rather than periodic payments the risk of them squandering the money was greater.
''
The Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...
'' reported in July 2011 that research by
Prudential had found that 79% of polled
pensioner
A pensioner is a person who receives a pension, most commonly because of retirement from the workforce. This is a term typically used in the United Kingdom (along with OAP, initialism of old-age pensioner), Ireland and Australia where someone of p ...
s in the UK collecting a company or private pension that year took a tax-free lump sum as part of their retirement benefits, as compared to 76% in 2008.
Prudential was of the view that for many retirees, a lump sum at the time of retirement was the most
tax efficient option.
However, Prudential's head of business development, Vince Smith Hughes, said, "some pensioners are beginning to regret the way they used the tax-free cash. The days of buying a shiny new car or going on a once-in-a-lifetime holiday may be gone."
See also
*
Lump-sum tax
A lump-sum tax is a special way of taxation, based on a fixed amount, rather than on the real circumstance of the taxed entity.
*
Lottery payouts Lottery payouts are the way lottery winnings are distributed. Typically, lotteries pay out around 50–70% of stakes (turnover) back to players. The remainder is then kept for administration costs and charitable donations or tax revenues. In gambli ...
*
Structured settlement
*
Distortions (economics) In neoclassical economics, a market distortion is any event in which a market reaches a market clearing price for an item that is substantially different from the price that a market would achieve while operating under conditions of perfect competit ...
*
Annuity
In investment, an annuity is a series of payments made at equal intervals.Kellison, Stephen G. (1970). ''The Theory of Interest''. Homewood, Illinois: Richard D. Irwin, Inc. p. 45 Examples of annuities are regular deposits to a savings account, ...
*
Seller's points Seller's Points (or seller contributions) are lump sum payments (or finance charges) made by the seller to the buyer's lender to reduce the cost of the loan to the buyer.
One point is equal to 1% of the loan amount. The payment can either be requ ...
References
External links
SEC guidelines for lump sum payouts''Red Book - Form of Contract, Lump Sum Contracts''
Contracts Working Party, IChemE, 2001,
''The lump sum handbook: investment and tax strategies for a secure retirement''"> ''The lump sum handbook: investment and tax strategies for a secure retirement''
Anthony Gallea, Prentice Hall, 1993,
''Lump-sum distributions from retirement saving plans: receipt and utilization''
James M. Poterba, Steven F. Venti, David A. Wise, National Bureau of Economic Research
The National Bureau of Economic Research (NBER) is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic c ...
, 1995
''Veterans' benefits; veterans have mixed views on a lump sum disability payment option: report to the chairman, Committee on Veterans' Affairs, House of Representatives''
DIANE Publishing,
''International claims: Their settlement by lump sum agreements''
Lillich, Richard B., Weston, Burns H., University Press of Virginia, 1975, {{ISBN, 0-8139-0642-3
Payments
fr:Forfait