I just received my first pension slip of the year for my annuity. As expected the USC has been deducted at 2%, so anyone now taking out a pension plan should consider they need to increase their payment to take care of this. If I had had not taken my tax free lump sum at retirement and instead added it to my monthly pension payment, I would also be paying USC on this also. I do not know how this works now, if the lump sum is exempt from USC, but it is woth considering