The rise in the National Living Wage to £11.44 from next April will provide a “massive” boost to low earners helping them meet rising living costs, an expert has said.
The wage is going up by £1.02, a 9.8 percent increase, with people aged 21 and over to be included in the new wage, rather than those aged 23 and above as at present.
This means those aged 21 to 22 on the current minimum wage will see their pay increase by £1.26 from the current £10.18, an increase of more than 12 percent.
Kate Smith, head of pensions at Aegon, said: “Raising the National Living Wage to £11.44 an hour, a massive 9.8 percent 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 percent, this is significantly higher than the most recent increases in national average earnings of 7.9 percent and September CPI of 6.7 percent used to increase most benefits.”
How much will the new Living Wages rise?
These are the new payment rates coming in from April 1 next year:
- National Living Wage (21 and over): £11.44 an hour (up from £10.42)
- 18 to 20-year-old rate: £8.60 an hour (up from £7.49)
- 16 to 17-year-old rate: £6.40 an hour (up from £5.25)
- Apprentice Rate: £6.40 an hour (up from £5.28)
- Accommodation Offset: £9.99 an hour (up from £9.10).
Ms Smith spoke about the pension benefits of the pay increase. She 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 (£20,820 a year) 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.”
Katherine Chapman, director of the Living Wage Foundation, said: “A rise in the statutory National Living Wage from next April is welcome news for low paid workers but it still falls short of the voluntary real Living Wage which is £12 per hour in the UK and £13.15 per hour for workers in London.
“There are now 14,000 Living Wage accredited employers across the UK who are committed to always paying everyone in their organisation, including contractors like cleaners and security guards, a real Living Wage based on the cost of living.
“Despite tough economic times, it has been heartening to see record numbers of businesses join our movement and we’d encourage other organisations who can, to make the Living Wage commitment too.”
The real Living Wage is based on the actual cost of living for everyday needs and applies to anyone aged over 18.
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