Kate Smith, Head of Pensions at Aegon, welcomes the Chancellor’s confirmation of an increase in the National Living Wage to £11.44 per hour, effective April 1, 2024 for over 21s.
“Raising the National Living Wage to £11.44 an hour, a massive 9.8% increase, will bring much-needed financial relief to low-income earners, significantly boosting their earning power and help to alleviate the burden of rising living costs.
“At almost 10%, this is significantly higher than the most recent increases in national average earnings of 7.9% and September CPI of 6.7% used to increase most benefits. And the added bonus is that this rate will also apply to 21 and 22 year olds for the first time, giving this group a pay rise of over 12%. However this still falls short of the real Living Wage which is £13.15 an hour in London and £12 an hour for the rest of the UK, which many employers have signed up to.
“A hidden benefit is that the increase in the National Living Wage will also have a positive impact on pension contributions, enabling employees to build up larger pension pots for a more secure retirement. As a result of the increase in the National Living Wage, an increase to £11.44 an hour (£20,820 pa) means employees on the National Living Wage will benefit from a total annual pension contribution of £1,166 a year made up of their own and their employer’s pension contributions, meaning almost an additional £ 150 going into an individual’s pension over the course of a year*.”
