Once he has taken the lump sum, the balance can be used as follows:
1. Buy an Annuity, or
2. Invest in an ARF/AMRF
3. A mix of Annuity and ARF
If he wants to “hedge his bets” he could use some of the capital to buy an Annuity (a guaranteed income for life) and invest the balance into an ARF (which offers greater flexibility and potentially leaves some capital behind on his death).
Perhaps he should seek professional advice.
Under an AMRF, he is limited to taking out 4% a year. When (if) he gets a guaranteed income of €12,700 a year, likely through the State pension, he can access the fund and draw down the money over a few years in a very tax efficient manner.
If he purchases an annuity, it is unlikely they will pay him more than 4%. But they will continue to pay that amount for the rest of his life, no matter how long his lives.
If the remainder is only going into a AMRF, he has a relatively small pension pot. An annuity is going to pay him a very small amount. But it really comes down to what he is comfortable with.