Listen to Episode 555
In this week's episode, I explain the concept of an ISA bridge and how it can help you manage the financial gap between your ideal retirement date, the age you can access your private pension and your state pension age. Next, I explain how the new FCA regulations for Buy Now Pay Later (BNPL) services are likely to impact consumers, including new mandatory affordability checks and additional Section 75 protection.
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Episode 555 Podcast Summary
Building an ISA bridge for retirement
Summary:
We discuss the importance of planning for the gap between when you want to stop working and when you can access your private and state pensions. With the private pension access age rising to 57 in 2028 and the state pension age potentially accelerating to 68, having a flexible pot of money is crucial. We explain how building an "ISA bridge" - using Cash and Stocks & Shares ISAs -can provide tax-efficient income during this interim period. We look at how to calculate the size of the bridge you need, the impact of sequencing risk, and how avoiding early pension withdrawals can prevent you from triggering the Money Purchase Annual Allowance (MPAA).
Key Insights:
- Understand your three retirement dates - You have the date you want to retire, the date you can access your private pension, and your state pension age. These rarely align.
- Private pension access age is changing - The normal minimum pension age is rising from 55 to 57 in April 2028, unless you have a protected pension age.
- An ISA bridge provides flexibility - Funding a tax-efficient ISA portfolio allows you to retire early, reduce working hours, or protect yourself against unexpected redundancy without touching your pension too soon.
- Avoid triggering the MPAA - Relying on an ISA bridge in your late 50s means you can avoid drawing taxable income from your pension, which could trigger the Money Purchase Annual Allowance and limit your future tax-relieved pension contributions.
- Cash ISA allowances are changing - The annual limit for a Cash ISA is dropping to £12,000 for anyone under the age of 65 from next year, making early planning even more essential.
Buy Now Pay Later regulations are changing
Summary:
We examine the new Financial Conduct Authority (FCA) regulations for Buy Now Pay Later (BNPL) services that came into effect on 15th July 2026. BNPL is now treated similarly to other regulated borrowing, bringing significant changes to how these services operate and the protections afforded to consumers. We detail the introduction of mandatory affordability checks, clearer upfront information regarding costs and missed payments, and the crucial addition of Section 75 protection.
Key Insights:
- Mandatory affordability checks - Providers must now assess if you can afford the repayments before approving a BNPL purchase, which may result in a hard credit check.
- Access to the Financial Ombudsman - If you have an unresolved dispute with a BNPL provider, you now have the right to escalate your complaint to the Financial Ombudsman Service for free.
- Section 75 protection applies - Purchases between £100 and £30,000 made using regulated BNPL services now benefit from Section 75 protection, meaning the lender is jointly liable if the retailer goes bust or the goods are faulty.
- Rules are not retrospective - These new consumer protections and regulations only apply to BNPL agreements taken out on or after 15th July 2026.
- BNPL is still debt - Despite the new safeguards, missed payments will still negatively impact your credit file and your future ability to borrow money, such as securing a mortgage.
Resources
Links referred to in the podcast:
- Sign up to our weekly newsletter
- Official State Pension Age Calculator
- Guide explaining how the Money Purchase Annual Allowance (MPAA) works
- Regular Contribution / Savings Calculator
- Full news article on the FCA Buy Now Pay Later regulation changes
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