Protected payments and contracting out

The starting amount: where protected payments come from

If your National Insurance record started before April 2016, your new State Pension was not worked out from scratch. Instead, the government calculated a starting amount: the higher of what you would have received under the old rules and what you would have received under the new rules, both measured at April 2016. If the old-rules figure was higher, the difference is your protected payment, paid on top of the full new State Pension. If the new-rules figure was higher, your starting amount is that figure, and post-2016 qualifying years can still raise it up to the full rate. Either way, the starting amount is the reason two people with identical post-2016 records can receive different pensions.

Contracted out: the deduction that surprises people

Before 2016, many employees were contracted out of the Additional State Pension: they and their employer paid lower National Insurance, and the money went into a workplace or private pension instead. If you were contracted out, your starting amount was reduced by a contracted-out deduction (often called COPE — the Contracted-Out Pension Equivalent). GOV.UK puts the consequence plainly: if you were contracted out, you will usually need more than 35 qualifying years to reach the full rate of the new State Pension. Post-2016 years can fill the gap, but they do so slowly — which is why a contracted-out worker with 35 years on paper can still fall short of £241.30. Your forecast shows whether a contracted-out deduction applies to you and how much of it remains.

How protected payments rise — and who inherits them

The main new State Pension rises under the triple lock, but a protected payment rises only in line with CPI. Over a long retirement that difference compounds, so the protected part of a pension slowly shrinks as a share of the total. On inheritance: if your marriage or civil partnership began before 6 April 2016, your spouse or civil partner can inherit half of your protected payment, provided you reached State Pension age on or after 6 April 2016 and died on or after that date. Part of an Additional State Pension can also be inherited under similar conditions. But if you remarry or form a new civil partnership before reaching State Pension age, you generally lose the right to inherit from a previous partner. Divorce works differently: a court can order pension sharing, which can add to one partner's State Pension and reduce the other's.

Frequently asked questions

I was contracted out for 20 years. Can I still get the full rate?

Possibly, but not automatically. Post-2016 qualifying years can raise your starting amount toward the full rate, but if the contracted-out deduction is large you may need more than 35 years in total. Your forecast shows the remaining gap.

Does my protected payment rise with the triple lock?

No. Protected payments rise with CPI only, while the main new State Pension rises under the triple lock.

Can my spouse inherit my whole State Pension?

No. A spouse cannot inherit your full new State Pension. They may inherit half of a protected payment and part of an Additional State Pension, under the conditions above.