Company Pension - joining at 62

sleepymans

Hi There
My husband is 62 and just started working for another company. He intends to retire in about 3 years time and has a final salary pension with British Rail which starts to be paid at age 60. The new employer has given him the option of joining their money-purchase pension scheme, he would contribute 3% and they would contribute 3%.
My question is, is it worth him joining the scheme for such a short time?
My instinct is to take any "free money" offered but frankly, he could pay equivalent into an ISA if there is no great benefit into contributing to a pension. Might there be any disadvantages in joining?
Apologies for being rather ill-informed about pensions. Thanks

kidmugsy

The biggest potential disadvantage with a pension is that the capital is tied up until you are old. But he's old already, so he'd need a pretty unusual reason not to take the free money. It's worth enquiring whether his employer offers "salary sacrifice" which is distinctly advantageous since it saves not only income tax but also national insurance.

Note too that if his existing pension plus (when he draws it) his State Pension add up to more than £20k per annum, then he'd be able to get at this new pension using "flexible drawdown" if he wished to.

atush

Yes, it is worth him joining even at this time and age.

Loughton_Monkey

Absolutely worth joining! The extra 3% free, for 2 or 3 years is a 'gift horse'. The only 'negative' is that 75% of the resulting fund will probably need to be taken 'drip feed'. But quite frankly, most people don't see that as a negative. When your earnings have dried up, what would you do with cash? You'd probably invest it and take a small amount out each month. That's what a pension does anyway.