Yes to earned income this year, no to next year. Just retired. I will have to check, but I'm pretty sure taking the whole lump sum this year would not push them into the 40% band. Yes to state pension (just started). So whenever they take the cash, 75% of it will be taxed at 20% (state pension + other work pension exceeds £11.5k). Ideally they should have deferred taking state pension, but that ship has sailed.
So let's call it £4k in tax and fees. But because their other pension income is already above the basic rate threshold, paying 20% tax on 75% of it now versus paying 20% tax on 75% of annual drawdown lumps should be functionally equivalent, right? The only difference is the higher SIPP fees, which points to moving it to an ISA.
No IHT concerns. Assets today are around £150k, mostly in their house.