For some reason I was making the underlying assumption in my mind that inflation = risk free rate (it's been a long day). Thus my initial sentiment.
My assumptions:
Buy and Hold strategy for the duration of the investment period and basically treat it as an investment fund.
She lives to 88, fully invest, doesn't withdraw and fully reinvest until 65 when she retires and sells the whole lot (so the tax implications will be the same for both).
Why these assumption? because we're comparing strategies not froufrou lifestyle decisions.
Investable time horizon: 47 Years
PV to year 47 of the 23 year of annuity she still has left coming to her (at 2% inflation): $951,194.61
at around a 5.5 % return compounded annually (i know i know I should compound monthly but wtv) gets you sensibly the same amount (~12.3M in year 47). R < 0.055 the annuity comes out ahead R > 0.55 Lump sum comes out ahead.