If your lump sum is after all taxes have been paid, don't put it into a pension as you will then be taxed on the proceeds from the pension as income. Instead, you could invest in a unit-linked bond and set this up with a regular income facility (some institutions such as Eagle Star and Hibernian allow around 7% p.a. without penalty). If you choose underlying funds which are appropriate to your investment requirements and risk attitude, you should be able to match your investment growth to your income drawdown, and therefore maintain the value of your capital. You will be taxed on the GROWTH in this fund, as you draw from it, but at 23%. All of the above depends on many factors, and you should spend some time doing a financial review with an INDEPENDENT financial adviser who will advise you accordingly.