Living wage increase will boost pensions
The pensions industry has applauded the rise in the national living wage, which will help boost pension savings.
Aegon’s Kate Smith has welcomed the chancellor's confirmation that he will increase in the national living wage to £11.44 per hour because it will help workers build up larger pension pots.
Smith, who is Aegon’s head of pensions, said: “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 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.”
Chancellor Jeremy Hunt announced the rise during the autumn statement on Wednesday and the changes will be effective from April 1, 2024 for over 21s.
Until now, the national living wage has only applied to Brits aged 23 and older. However, as of next year, the wage will extend its reach to 21 and 22-year-olds - helping around two million workers.
Hunt said the move "aims to end low pay in the country, fulfilling our manifesto promise and continuing the positive impact the national living wage has had since its introduction in 2016."
