Pension Income

xylophone

To clarify I should have mentioned a total of 5% per year but taken in 12 monthly instalment. She has no need to draw until she retires or may have to take it earlier if she is made redundant. She is single and no debts or mortgage.  Modest lifestyle.

It seems that the OP's colleague is still working which is likely to mean that she has  workplace pension  provision over and above the  personal pension from which she has drawn the PCLS.

If she is made redundant she will presumably have a redundancy payment - some of this might be taxable in the year of receipt. 

She might also choose to access the workplace pension.

All in all, the income from pensions is taxable income as is the state pension.

She will need to calculate how much income she has above the personal allowance in order to establish her liability to tax.

xylophone

And she might like to check her state pension forecast.
https://www.gov.uk/check-state-pension

jayship

Thanks to everyone for your input. It is appreciated