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Yahoo
13 hours ago
- Business
- Yahoo
Reform's attack on public sector pensions doesn't go far enough
Richard Tice has announced that new employees in the 10 councils now controlled by Reform UK will not be allowed to join the Local Government Pension Scheme (LGPS), and that existing staff already in the LGPS will get lower pay rises to compensate for their generous pensions. This change is all part and parcel of cutting costs for local council taxpayers. If Mr Tice really does believe in cutting taxpayer costs, then shouldn't all five Reform UK MPs withdraw from the MPs' generous, and expensive, defined benefit (DB) pension scheme? Each year MPs earn a pension of 1/51th of their salary, increased in line with inflation, with a retirement age from the state pension age, if they are no longer MPs. After just one five-year Parliamentary term, an MP on the current salary of £93,904 would be entitled to a pension of £9,206 a year in today's money, fully inflation-linked, and with a 3/8 widow/widower pension. Twenty years as an MP means a £36,000 pension – higher if they served as a minister. The MPs' pension scheme annual report shows the cost of new pension entitlements for 2024 was 28.8 pc of salary, with MPs themselves paying 11.1pc, leaving taxpayers to pay the balance of 17.7pc. This means total pay and pensions for an MP is over £110,000; £93,000 salary and £16,600 pension. And because the annual cash contribution paid by today's taxpayers is only 10.5pc of salary, a big chunk of the cost is being passed on to future taxpayers. Nigel Farage is no stranger to controversies over his pension. In 2017, following Brexit, he said he wouldn't be giving up any of his £73,000 MEP pension, so don't expect him rushing to leave the MPs' pension scheme. Meanwhile, the Chancellor Rachel Reeves – who as an MP for 15 years has a pension of at least £26,000 a year – is trying to push pension schemes to invest more in UK equities and infrastructure. Unlike other 'unfunded' public sector pension schemes – the NHS, teachers, civil servants and armed forces – which pay pensions from annual taxation, the Parliamentary Contributory Pension Fund holds assets, like private sector schemes. And it seems to be setting a good example on UK investment At March 2024 it had £866m of assets, with 40pc held in UK equities, much higher than private sector DB schemes or the LGPS, and with another 9pc in UK property. It also has a 10pc target for 'renewable infrastructure' and 'energy infrastructure', which it's close to meeting. But before the trustees get too smug they should explain what they think they are doing holding 10pc of assets – £90m – in high-risk 'junk bonds' rated BB and below, not just a bit higher than the average, but spectacularly higher. The trustees should also give taxpayers a full breakdown of the annual fees and costs of running its Byzantine investment mandate, with umpteen managers. The published figures show £1.2m in investment management costs, just 0.14 pc of assets, impressively low. But astonishingly, this doesn't include the costs for 'pooled investment vehicles' – making up 80pc of assets. The trustees say, with a straight face, that these costs are 'not separately provided'. Dame Meg Hillier (Labour) and Dame Harriet Baldwin (Conservative), the current and former chairman of the influential Treasury Select Committee are both trustees. Can they use their reputation for asking awkward questions and demanding transparency when grilling reluctant ministers, to get the fund managers to provide the total costs (a multiple of the modest fees quoted)? In 2013 Dame Harriett argued in her response to a consultation that MPs should move from DB to DC pensions like 'the majority of private sector pension schemes'. She was right in 2013, and is still right today. The current pension should be stopped, and MPs moved to a DC pension, with taxpayers putting in 10.5pc of salary, the current cash contribution, still much more generous that the average in the private sector. As well as reducing cost and risk for taxpayers, this would help to kick-start the reform of other public sector pensions, where staff are still earning DB pensions that are more generous than those in private sector ever were. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
14 hours ago
- Business
- Telegraph
Reform's attack on public sector pensions doesn't go far enough
Richard Tice has announced that new employees in the 10 councils now controlled by Reform UK will not be allowed to join the Local Government Pension Scheme (LGPS), and that existing staff already in the LGPS will get lower pay rises to compensate for their generous pensions. This change is all part and parcel of cutting costs for local council taxpayers. If Mr Tice really does believe in cutting taxpayer costs, then shouldn't all five Reform UK MPs withdraw from the MPs' generous, and expensive, defined benefit (DB) pension scheme? Each year MPs earn a pension of 1/51 th of their salary, increased in line with inflation, with a retirement age from the state pension age, if they are no longer MPs. After just one five-year parliamentary term, an MP on the current salary of £93,904 would be entitled to a pension of £9,206 a year in today's money, fully inflation-linked, and with a 3/8 widow/widower pension. Twenty years as an MP means a £36,000 pension – higher if they served as a minister. The MPs' pension scheme annual report shows the cost of new pension entitlements for 2024 was 28.8 pc of salary, with MPs themselves paying 11.1pc, leaving taxpayers to pay the balance of 17.7pc. This means total pay and pensions for an MP is over £110,000; £93,000 salary and £16,600 pension. And because the annual cash contribution paid by today's taxpayers is only 10.5pc of salary, a big chunk of the cost is being passed on to future taxpayers. Nigel Farage is no stranger to controversies over his pension. In 2017, following Brexit, he said he wouldn't be giving up any of his £73,000 MEP pension, so don't expect him rushing to leave the MPs' pension scheme. Meanwhile, Chancellor Rachel Reeves – who as an MP for 15 years has a pension of at least £26,000 a year – is trying to push pension schemes to invest more in UK equities and infrastructure. Unlike other 'unfunded' public sector pension schemes – the NHS, teachers, civil servants and armed forces – which pay pensions from annual taxation, the Parliamentary Contributory Pension Fund holds assets, like private sector schemes. And it seems to be setting a good example on UK investment At March 2024 it had £866m of assets, with 40pc held in UK equities, much higher than private sector DB schemes or the LGPS, and with another 9pc in UK property. It also has a 10pc target for 'renewable infrastructure' and 'energy infrastructure', which it's close to meeting. But before the trustees get too smug they should explain what they think they are doing holding 10pc of assets – £90m – in high-risk 'junk bonds' rated BB and below, not just a bit higher than the average, but spectacularly higher. The trustees should also give taxpayers a full breakdown of the annual fees and costs of running its Byzantine investment mandate, with umpteen managers. MPs want their cake and to eat it, too The published figures show £1.2m in investment management costs, just 0.14 pc of assets, impressively low. But astonishingly, this doesn't include the costs for 'pooled investment vehicles' – making up 80pc of assets. The trustees say, with a straight face, that these costs are 'not separately provided'. Dame Meg Hillier (Labour) and Dame Harriet Baldwin (Conservative), the current and former chairman of the influential Treasury Select Committee are both trustees. Can they use their reputation for asking awkward questions and demanding transparency when grilling reluctant ministers, to get the fund managers to provide the total costs (a multiple of the modest fees quoted)? In 2013 Dame Harriett argued in her response to a consultation that MPs should move from DB to DC pensions like 'the majority of private sector pension schemes'. She was right in 2013, and is still right today. The current pension should be stopped, and MPs moved to a DC pension, with taxpayers putting in 10.5pc of salary, the current cash contribution, still much more generous that the average in the private sector. As well as reducing cost and risk for taxpayers, this would help to kick-start the reform of other public sector pensions, where staff are still earning DB pensions that are more generous than those in private sector ever were.
Yahoo
2 days ago
- Business
- Yahoo
Government sells final shares in NatWest 17 years after £45bn bailout
The UK has sold its final shares in NatWest Group, ending 17 years of state ownership since the £45bn taxpayer bailout that saved the bank from collapse at the height of the 2008 financial crisis. The full privatisation of NatWest is a symbolic moment for the banking group – formerly known as Royal Bank of Scotland (RBS) – and draws a line under the most tumultuous chapter in its near 300-year history. However, it comes at a £10bn loss to the taxpayer, with the state having only recouped about £35bn of its costs, because its shares have long languished below the average 502p level paid in the bailout. That compares with the £900m profit recouped from the sale of shares in Lloyds Banking Group, which was privatised in 2017, nine years after receiving £20.3bn in state aid for rescuing HBOS during the banking crash. The Treasury said that while it did not recover the entirely of the RBS bailout bill, 'the alternative would have been a collapse with far greater economic costs and social consequences', that could shater confidence in the UK's financial system and put savings and livelihoods at risk. Chancellor Rachel Reeves, said: 'Nearly two decades ago, the then-government stepped in to protect millions of savers and businesses from the consequences of the collapse of RBS.' 'That was the right decision then to secure the economy and NatWest's return to private ownership turns the page on a significant chapter in this country's history. We protected the economy in a time of crisis nearly 17 years ago, now we are focused on securing Britain's future in a new era of global change.' The government has now exited all of the banks it helped bail out during the financial crisis, the Treasury said. RBS became a symbol of the UK banking sector's implosion during the 2008 global financial crisis, with public ire focusing on its aggressive expansion under the former chief executive Fred 'The Shred' Goodwin. Goodwin was stripped of his knighthood in 2012, but is now estimated to be receiving a pension worth nearly £600,000 per year. In 2007 RBS led a consortium to buy the Dutch bank ABN Amro for £49bn – a huge sum at the top of the market. It was then the largest deal in financial services history, and for a short period made RBS the world's biggest bank. With £2.2tn in assets, it was more than double the size of the UK economy. Executives' excessive spending, which extended to private jets and a lavish £350m campus outside Edinburgh, also stretched the bank's finances just as the sector was facing a credit crunch. RBS was eventually forced to take a state bailout in October 2008, with the taxpayer eventually injecting £45bn into the lender, without which millions of customers' savings would have been put at risk. It left the government with an 84% stake in the banking group, leading to years of government austerity that many blame for hollowing out public services across the country. RBS, for its part, was forced to cancel bonuses and begin a long turnaround that involved slashing tens of thousands of jobs, shrinking its investment bank, and pulling out of almost 50 countries to become a UK-focused lender. It finally returned to profit in 2018, but ditched the toxic RBS name in 2020, rebranding the group – and its branches in England and Wales – as NatWest. The government started to recoup its costs through dividends paid out by the lender, and slowly sold its shares through a combination of sales to institutional investors and a drip-feeding of stock into the open market. NatWest also fast-tracked the process through multibillion-pound share buybacks. That process is now completed, bringing NatWest back into full private ownership nearly two decades after taxpayers saved it from the brink. NatWest chief executive, Paul Thwaite, said: 'This is a significant moment for NatWest Group, for all those who work here and for the UK more widely. As we turn the page on the financial crisis, we can look to the future with confidence, without forgetting the lessons of the past.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Mail
3 days ago
- Business
- Daily Mail
Peter Dutton is roasted over very common travel act: 'This is brilliant'
Aussies have ripped into former Opposition leader Peter Dutton after footage emerged of him catching a commercial flight weeks after his election loss on May 3. A passenger shared a video to TikTok on Friday of Dutton on board a Virgin flight. The short clip showed Dutton briefly spotting the camera while he put his luggage in the overhead locker. 'Peter Dutton literally went from almost being Prime Minister of Australia to flying commercial,' the caption read. 'Peter Dutton in the only seat he could get.' Several social media users were quick to slam Dutton with the footage being viewed almost 1million times. 'This is brilliant,' one wrote. 'Look says it all,' a second added. Another said: 'So satisfying.' 'I would definitely put my seat back or push my knees into the seat in front. continuously. back and forth..... in and out!!!' a fourth chimed in. Others applauded Dutton for flying commercial and reducing his environmental impact. 'If he flew private you would hate him for that as well,' one wrote. 'Good on him! He can obviously afford first class but is humble,' another said. 'Good on him for flying commercial, unlike Greens leader Adam brandt who used millions of taxpayer money to fly private jets,' another wrote. 'In fairness he is no longer a public figure or elected member of parliament so he can probably have some privacy now,' another said. The video comes just days after Prime Minister Anthony Albanese told Brisbane's Nova FM radio station he had 'an okay relationship, a professional relationship, if you like' with Dutton. 'It's really tough for him and his family as well,' Albanese added. 'I'm not sure what he will do, but I'm sure he'll be successful in other arenas as well.' Dutton suffered the ultimate indignity on election night when he not only led a failed campaign but was ousted from his own seat of Dickson in Brisbane's outer-northern suburbs - which he had held since 2001 - by Labor's Ali France. In a reflection of the respect the two men held for one another - even if they traded barbs on the campaign trail - Dutton gave a gracious concession speech in which he revealed he had rung Albanese to tell him how proud his late mother would have been of his victory. The Prime Minister said politics was an 'honourable profession' but acknowledged it came with huge downsides. 'You expose yourself publicly, particularly with social media,' he told the radio station. 'Don't read the comments out there, folks. It can be really brutal, and you've got to be resilient.' Dutton had yet to commit to what he will do next, but vowed not to be a commentator sniping from the sidelines. 'The best model I've seen is where leaders, former, make a graceful exit from politics and maintain their graceful silence, so that'll be my model,' he said recently. Dutton reportedly made $30million of property transactions over 35 years. He purchased his first home at 19, before going on to buy and sell 26 pieces of real estate, according to an analysis of property and corporate records, parliamentary registers and real estate data carried out by the Sydney Morning Herald. Dutton turned a healthy profit from his various real estate investments, with property purchases totalling $12million and sales of $18.8million. The properties include luxury city apartments, childcare centres, a shopping plaza, a beachfront mansion and a farm. At his peak he owned five properties at the same time across Queensland, in addition to a flat in the ACT.
Yahoo
3 days ago
- Business
- Yahoo
Marginal tax rate: What it is and how to find yours
Your marginal tax rate is the highest income tax rate you'll pay on your income. Because the U.S. has a progressive tax system, different tiers of your income are taxed at different rates. The marginal tax rate is the rate that applies to your last dollar of income. It's important to understand how the marginal tax rate — and tax brackets in general — work, because your income isn't taxed at one single rate. What's more, by claiming all applicable tax deductions you may be able to reduce your marginal tax rate. As your income increases, portions of it are taxed at higher rates. The tax rate that applies to your final dollar of income is your marginal tax rate. Because only a portion of your income is taxed at the highest rate, your effective tax rate — which takes into account that some portions of your income are taxed at lower rates — is likely lower than your marginal rate. Suppose you're a single taxpayer who earned $70,000 in 2024. While your income falls into the 22 percent tax bracket — that's your marginal tax rate — a majority of your income is actually taxed at much lower rates. Based on the 2024 tax brackets, for taxes due in 2025, this is how your income is taxed: In other words, $11,600 of your income is taxed at 10 percent, $35,550 of your income is taxed at 12 percent and the remaining $22,850 of your income is taxed at 22 percent. As the above illustration shows, you pay the lowest tax rate on a subset of your income, until you've surpassed the top end of the income range for that tax bracket. Then the next tier of your income is taxed at the next highest rate, until you've surpassed the top end of the income range for that bracket, and so on. One of the biggest misunderstandings many Americans have about income taxes is that they think falling into a particular bracket, such as the 22 percent bracket, means that all of their income is taxed at that rate. In truth, that rate only applies to a portion of your income. Here are the 2025 income tax brackets, for taxes due April 2026, or October 2026 with an extension: Tax rate Single Head of household Married filing jointly or qualifying widow Married filing separately 10% $0 to $11,925 $0 to $17,000 $0 to $23,850 $0 to $11,925 12% $11,925 to $48,475 $17,000 to $64,850 $23,850 to $96,950 $11,925 to $48,475 22% $48,475 to $103,350 $64,850 to $103,350 $96,950 to $206,700 $48,475 to $103,350 24% $103,350 to $197,300 $103,350 to $197,300 $206,700 to $394,600 $103,350 to $197,300 32% $197,300 to $250,525 $197,300 to $250,500 $394,600 to $501,050 $197,300 to $250,525 35% $250,525 to $626,350 $250,500 to $626,350 $501,050 to $751,600 $250,525 to $375,800 37% $626,350 or more $626,350 or more $751,600 or more $375,800 or more Here are the 2024 income tax brackets for taxes due April 2025 (or October 2025 with an extension): Tax rate Single Head of household Married filing jointly or qualifying widow Married filing separately 10% $0 to $11,600 $0 to $16,550 $0 to $23,200 $0 to $11,600 12% $11,600 to $47,150 $16,550 to $63,100 $23,200 to $94,300 $11,600 to $47,150 22% $47,150 to $100,525 $63,100 to $100,500 $94,300 to $201,050 $47,150 to $100,525 24% $100,525 to $191,950 $100,500 to $191,950 $201,050 to $383,900 $100,525 to $191,950 32% $191,950 to $243,725 $191,950 to $243,700 $383,900 to $487,450 $191,950 to $243,725 35% $243,725 to $609,350 $243,700 to $609,350 $487,450 to $731,200 $243,725 to $365,600 37% $609,350 or more $609,350 or more $731,200 or more $365,600 or more Need an advisor? Need expert guidance when it comes to managing your money? Bankrate's AdvisorMatch can connect you to a CFP® professional to help you achieve your financial goals. To calculate your marginal tax rate, you need to know your taxable income and relevant filing status. With this information, it's simple to determine your marginal tax rate. Refer to the tax brackets above and identify the bracket with the income range that matches your total taxable income — that's your marginal tax rate. That said, your taxable income is a bit more complex to calculate: First, add up all of your sources of income to determine your gross income. Then, subtract certain adjustments to determine your adjusted gross income (AGI). Then, determine whether you will take the standard deduction or itemize deductions. Finally, subtract your standard deduction or itemized deduction from your AGI to get your taxable income (some taxpayers may also be able to deduct the qualified business income deduction from their AGI). On Form 1040, your adjusted gross income, or AGI, is listed on line 11, and your taxable income is listed on line 15. To reduce your marginal tax rate, you must reduce your taxable income. While it may be possible for some people to defer income that they earn late in the year to the following year, most people will need to take advantage of tax deductions. By reducing your marginal tax rate, you'll reduce your total tax bill. To reduce your taxable income, consider maximizing contributions to tax-advantaged accounts and claiming all applicable deductions. The more money you contribute to tax-advantaged accounts — like a 401(k), traditional IRA, health savings account (HSA) or flexible spending account (FSA) — the more you will reduce your taxable income, while also setting yourself up financially for the future. You should also make sure you're claiming all eligible deductions, even if you take the standard deduction. There are several 'above-the-line' deductions that will reduce your gross income, even if you don't itemize, including deductions for student loan interest and educator expenses, along with certain business expenses and self-employment taxes. Maximizing your deductions could lower your marginal tax rate. Finally, you may want to carefully assess whether it makes sense to itemize deductions instead of taking the standard deduction. By itemizing, you can take advantage of even more deductions, including those for charitable contributions, mortgage interest, property taxes, state and local taxes (SALT), and qualified medical expenses. Still, for it to make sense to itemize, generally your itemized expenses need to add up to more than the standard deduction. The standard deduction is worth $15,000 for single filers and those who are married filing separately, $22,500 for head of household filers and $30,000 for married filing jointly couples for tax year 2025. Another way to trim your tax bill is by realizing losses; that is, selling investments at a loss. Not only can capital losses offset capital gains (when you sell an investment for more than you bought it), but you can also reduce some of your taxable income. You need to be mindful of how long you've owned an asset before selling — the IRS generally uses the one-year mark to differentiate between short- and long-term gains and losses. By realizing net capital losses, you can reduce your taxable income by up to $3,000 a year, which will reduce your overall tax obligations and potentially reduce your marginal tax rate. Learn more: Short-term vs. long-term capital gains: How they work For most taxpayers, your marginal tax rate will differ from your effective tax rate. Knowing the difference between your marginal tax rate and effective tax rate is important because it informs how much you owe the IRS. Your marginal tax rate is the highest rate that applies to only that portion of your income that's in the highest tax bracket, whereas your effective tax rate is your average tax rate — or the tax rate you actually pay. Consider the example above of a single taxpayer earning $70,000. While that person's marginal tax rate is 22 percent, their effective tax rate is about 15 percent. To determine your effective tax rate, simply divide your total taxes owed by your taxable income. Learn more: Marginal vs. effective tax rates: How they differ and how to calculate each rate While the federal income tax system in the U.S. is progressive, some states impose a flat tax on income. With a marginal tax rate, you pay different tax rates up to your highest rate, but with a flat tax system all of your income is taxed at the same rate. There has been a movement in recent years among states to adopt flat tax systems, though specific rates across states vary widely. The 14 states with a flat tax system in 2025 are: Arizona, Colorado, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Michigan, Mississippi, North Carolina, Pennsylvania and Utah, according to the Tax Foundation. Another nine states don't levy an income tax at all. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
