A post on Facebook that has been shared over 22,000 times makes comparisons between the national living wage and the level of state pension. Whether these figures should or can be compared is a matter of opinion, but the claims in the post need some context if you do.
The post reads: “If the living wage is £18,000 a year why are our pensioners only receiving £8,000 a year and still having to pay for a TV license”.
The national living wage
The national living wage is an hourly rate that all paid workers aged 25 and over (with some exceptions including apprentices in their first year) are entitled to. Workers aged 24 and under are entitled to the national minimum wage, for their age bracket, again, with some exceptions.
The post is about right in its calculation of the annual salary for someone on the living wage. The living wage currently stands at £8.72 an hour. The average working week in 2019 was 37 hours, which would amount to £16,777 a year. If we assume a 40 hour working week, then over the year someone would earn £18,137.
The national living wage is set to rise in April to £8.91 an hour, when it will also be extended to 23 and 24-year-olds for the first time.
However, not everyone receives the level of minimum wage they are legally entitled to. The Low Pay Commission, which advises the government, estimates that in April 2019, 424,000 people were being paid less than the minimum wage they were entitled to, which is about 20% of minimum wage workers.
Pensions
It can be difficult to generalise about state pensions, because the amount received varies so much depending on the individual. It can be affected by a number of factors including when you were born, how long you worked and paid national insurance for and whether you got national insurance credits, for example if you were ill or unemployed.
Some pensioners claim the basic state pension, which is available for men born before 6 April 1951 and women born before 6 April 1953. The maximum for this pension currently stands at £134.25 a week—£6,981 a year—although this increases slightly every year. For people born after these dates, the new state pension amounts to up to £175.20 a week, or £9,100 a year. This is more than is claimed in the post, but not everyone will receive the full amount.
Many people will also receive money from a workplace pension, while those claiming the basic state pension may also be eligible for the additional state pension. Other people may be eligible for pension credit, or have personal pensions, such as stakeholder pensions or self-invested personal pensions.
Many people also have to pay tax on their pensions, but do not have to pay national insurance contributions after retirement age.
TV Licence
Pensioners under 75 have always had to pay the TV licence. Since 1 August 2020, most pensioners over 75 now also have to pay for a TV licence. However, there are some exceptions to this.
Anyone aged 75 or over who receives pension credit can still claim a free licence. People who are registered blind only need to pay half the fee. And some people in residential care may qualify for a special concessionary licence which costs £7.50.
In terms of the comparison made in the post, it is worth noting that people who receive the living wage do also have to pay the TV licence fee, which currently stands at £157.50 a year.