Here's a simple spreadsheet to illustrate JZ's point.
Sheet one (the tabs) has if you just collect and spend it. You can see at age 78, the cumulative amount collected of option 2 passes option one. So if you live to be older than 78, option 2 nets you more.
Sheet 1 shows JZ's first and latest post in this thread.
This is a very simplistic way to look at it. Given that you can collect earlier with option one, and money now is worth more than future money, finding the net present value of each option is more useful.
This is on sheet 2 (second tab of the spreadsheet), which shows JZ's second post in this thread.
You can change the discount rate (cell E1), but basically if you got 3% or higher, option 2 will never beat option one, only at <3% will you see option 2 win.
I'd personally be going for option one, for the bird in the hand of both you potentially dying and for them becoming potentially insolvent or have to cut pensions (both are "get the money while you can" ideas), as well as the fact that the NPV of the money now indicates--to me--the options are close enough that if you're investing any of it, it's worth getting it earlier. Since you say you have the 3X to cover you for the next few years, you can invest that money (live off the pension and invest that current money, or live off that money and invest the pension money, doesn't make a difference), so option 1 seems better to me, unless you're SUPER risk adverse and have no money invested, just sitting in cash.