Bob: I am a year or two away from retirement, after 30 years with a MegaCorp. As I sharpen the pencil and look at our vacation (and other) plans, I see a strong incentive NOT to take your unused vacation as a lump sum payment. I earn 6 weeks of vacation per year, and we can bank up to 3 weeks (the rule has been lowered to 2 weeks, but I am grandfathered with 3 weeks in the bank).
One of my colleagues told me of his plan, and I think this is the "best practice" use of vacation. He will work until Thanksgiving, then stop. He will use his unused current year vacation to stay on the payroll until January 1st 2014. On January 1st, he is granted the full year's 6 weeks vacation for 2015. He uses the 6 weeks of 2015 vacation pay and his 3 weeks of banked vacation to stay on the payroll until late February 2015. Not only does this strategy allow him to earn the 6 weeks vacation for 2015, but it boosts his pension. We have a traditional pension plan, and virtually everybody in the company takes the Lump Sum payment. A 30-year employee in the traditional pension plan - with a salary of say $150,000 - will see his Lump Sum value grow by maybe $6,000 or $7,000 per month of service. This is because of the severe back-end nature of the traditional pension plan. Bottom line is that by staying on the payroll for an additional 3 months, this guy grows his pension payment by $20,000 and he also earns the 6 weeks vacation - another $15,000 or so.
There are personal tax issues that each employee is exposed to, and other tax planning issues (due to taxable lump sums, such as stock options or RSU's) may overwhelm the vacation strategy. But the additional $35,000 in my example is pretty compelling.
By the way, when I talked to a senior person in HR they strongly encouraged me to take the unused vacation as salary rather than a lump sum payment. Clearly, they understand the impact on the pension too. Not only that, but you get benefits (medical, etc) during the time you are on vacation.