It depends a bit on estate planning. I would see a few situations where it’s better to take less than 25%:
1) if your spouse is significantly younger than you (say a decade or more). It makes sense to leave as much as possible accumulating in the ARF tax free so that spouse can take advantage of it as you will likely predecease them.
2) if your ARF is so big you think you’ll never use it all and want to bequeath it. It grows tax-free and then on death it gets taxed at 30% and then distributed to your heirs.
3) if your ARF is small and you’re only paying 20% marginal rate on income in retirement it’s reasonably tax efficient to not take the lump sum and draw down more heavily later.
All of the above depends on real investment returns of 5%. Very likely with equities over decades but extended periods of lower returns are possible. Look up threads on “sequence of returns” and “bomb out risk”.
But for most people it’s a good idea to take the 25% tax free and use it to renovate the house, pay off all debts, and buy a new car.