State Pension. Protected Payment ?

mayfly1

I've just received the confirmation letter that my state pension is rising from £175.20  to  £179.60.  All good.
But it also informs me that I am getting an extra 'protected payment' of £21.  I was baffled by this so I checked the pension website and was even more baffled.
Something about my starting point being higher than the actual pension ?  What ?
I thought everybody who has paid in got exactly  the same pension.   What is this 'starting point' business ?
I'm happy to take the money but I don't want them coming back in a few years time demanding  £thousands  because I've been overpaid.
Can anyone explain this as simply as possible.    Thanks.
(I am 66 and retired in November 2019.)

molerat

How much were you receiving per week / 4 weeks - more than £175.20 / £700.80 ? How much does it state your new weekly payment is ?

Everyone does not get the same pension.  The new pension is £175.20 for 2020/21 but those under the transitional arrangements with a pre 2016 S2P history can receive more, the amount above this is the protected payment

LHW99

I think it relates to the old pre-2016 SERPS / S2P components.

Linton

When the State Pension scheme was changed in 2016 you were assigned an accrued SP that was the maximum of that calculated under the old and new rules.  It so happened that thanks to your SERPS/S2P/ASP the calculation under the old rules gave  a value above the maximum new state pension.  Despite it being above the new pension limit you were allowed to keep this excess which is called the "Protected Payment".

I dont know whether the protected payment is paid.  How much SP are you actually receiving now?  Is it about £196/week? 

Marcon

mayfly1 said:

I've just received the confirmation letter that my state pension is rising from £175.20  to  £179.60.  All good.
But it also informs me that I am getting an extra 'protected payment' of £21.  I was baffled by this so I checked the pension website and was even more baffled.
Something about my starting point being higher than the actual pension ?  What ?
I thought everybody who has paid in got exactly  the same pension.   What is this 'starting point' business ?
I'm happy to take the money but I don't want them coming back in a few years time demanding  £thousands  because I've been overpaid.
Can anyone explain this as simply as possible.    Thanks.
(I am 66 and retired in November 2019.)

Quick google on 'state pension protected payment' gets you straight to a nice simple answer: 

The part of your starting amount which is above the full new State Pension is called your ‘protected payment’. This is paid on top of the full new State Pension.

Source: https://www.gov.uk/new-state-pension/how-its-calculated

xylophone

You reached SPA in November 2019?

See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

 bearing in mind that the full NSP at commencement (6/4/16) was £155.65. 

Two calculations were done

NI years/30 x £ 119.30 (Full Basic) + (Additional State Pension - (if applicable, Deduction for Contracting Out)

NI years/35 x £155.65 (Full NSP)  -  (If applicable) Contracted Out Pension Equivalent

Your Foundation (starting) amount was the higher of the two,


At   6/4/16 your "foundation amount" was higher than a full NSP - you were  therefore in the position of Jenny (page 8) -  you had a full NSP of £155.65 plus   an amount over and above (your "Protected Payment").

Since 6/4/16, the full NSP has increased under the Triple Lock, reaching £179.60 a week for 2021/22.

The "Protected Payment" has increased by CPI.