General Discussion
In reply to the discussion: A Thought on The Record Powerball Jackpot ... [View all]A HERETIC I AM
(24,365 posts)But none of the ones I looked at gave the option for entering a specific percentage increase.
But to the best of my knowledge, the answer would be no, the first payment would not equal 1/30th of the jackpot.
I think it is important to understand that the Powerball people did not have $587 million on hand. What they had was the "cash option" amount and the jackpot figure is always stated as "estimated".
So for the sake of argument, let's say the cash option at the time of the drawing was $300 million. If the winner(s) decide to take the payments, Powerball buys what is known as a "Single Premium, Period Certain annuity" with a "return of principal provision" and an annual 4% "step up". On their website they indicate that the investments made inside the annuity are mostly US Treasury Bonds. They pay an initial payment to the winner and then they buy the annuity with a 29 year period certain. The insurance company the annuity is bought from will take the money and invest it in a bond portfolio that will have bonds mature every year on or about the payment date in order to cut the annual check. This portfolio is structured so that each successive payment is 4% higher than the one before and with the 29th payment the annuity is exhausted. Most annuities have something left over, called the "death benefit". That goes to the heirs or the estate of the annuitant. The Powerball annuity has no death benefit. That isn't to say that if you die before you collect all 29 payments you lose the rest, rather the remaining payments go to any beneficiaries you would name.
Hope that helps a little