What is the best pension release option...?

Most of those options relate to the structure of the pension she would receive and this will depend upon her circumstances. The first thing she needs to decide is whether to claim the lump sum which will result in a reduced pension. For most people it is probably better to do this but you have not given enough information for anyone to actually advise her. Assuming she takes the lump sum (and reduced pension) then this sum will not be taxed. The pension will, of course, be taxed as any other earned income. I think she needs to take professional advice as I am worried about your comment which implies she thinks the money in the pension fund has already been taxed. If this is an approved scheme then the tax due on the earnings paid into the scheme will have been deferred until the benefits are paid out. The tax on the pension payments is the deferred tax on those earnings. And yes, she will have to sign the declaration. There are rules about recycling the lump sum back into another pension and for claiming a higher pension due to impaired health. She needs to confirm the statements in the declaration to ensure the payouts are above board.