Several small pensions

Abbey1

My husband has about five smallish pensions.  We plan to draw down lump sums as and when needed.  I'm aware that 25% of the pot is tax free.  My question is how do we actually do this? I mean who will calculate the tax due or is it all down to self assessment? 
Thank you in advance.

Albermarle

The pension provider will take tax from the 75% part that is not tax free. It is likely that this will be more tax than he needs to pay and he will have to claim some back. Luckily that is relatively straightforward. You either fill in a form or if you can wait the tax system will automatically process calculate any refund due a few months after the tax year ends.
Taking the pension pot later in the tax year can minimise overpayment of tax.

Abbey1

Thank you.  My other question is, how will they know about the other pension pots?  So, suppose one is for 50k and then others are less, but in total add up to £100k, I assume 25K is tax free, but if we draw down £25k from the first one, obviously it will look like more than 25% of the pension held with that provider.  

Hope this makes sense??  

Abbey1

Ignore that question.... I have just read that 25% of each lump sum is tax free.... 

tacpot12

When he asks the take some money out, there might be a couple of options on how he can do this. He needs to find out what the options are, and what the tax implications are (come back to the MSE forum) and let the pension provider know how much he wants to take and how he wants to take it. Then, as Albermarle says, the provider will take the tax that is necessary.

He should try to make sure that he uses up his personal income tax allowance every year, so even if you don't need the money. It could be worth withdrawing enough taxable funds from the pensions to ensure all his allowance is used up, and stashing the money into a high-interest savings account or cash ISA (depending on what other interest-producing savings he has), or he can give it to you if you have more tax allowances available.  

Albermarle

When he asks the take some money out, there might be a couple of options on how he can do this.

In addition he will most likely get asked a series of questions ( maybe by phone or by filling in an on line form) to ensure he knows what he is doing.

The provider is obliged by law to warn you of the potential pitfalls of emptying a pension pot. For example they will say you might run out of money later in retirement etc . The call/form will be kept on record so if a customer comes back 10 years later saying they did not understand what they were doing and want compensation, the provider has covered their backside. Plus of course it may actually stop some customers doing something stupid.