The Trump administration is looking Down Under for inspiration on how to enhance the United States’ retirement financial savings system.
President Donald Trump on Tuesday said on the White House that his administration is looking into an Australian-style retirement program.
“We’re looking at it very seriously,” Trump said. “It’s a good plan. It’s worked out very well.”
Australia’s major retirement financial savings program — often known as “superannuation” — may need caught the eye of Washington officers.
Superannuation, or “super” for quick, is Australia’s flagship retirement financial savings program.
Employers are required to fund staff’ financial savings accounts, that are invested in choose funds — often known as tremendous funds — which can be locked up till retirement. The employer-funded contributions are made on prime of paying staff their common earnings. Employees may contribute to their very own financial savings account.
Employers should contribute the equal of 12% of an worker’s earnings into these tremendous funds — a gradual improve from 3% when the trendy superannuation program was established in 1992.
“There is no opt out,” Tim Jenkins, companion at consulting agency Mercer, instructed NCS. “If you are employed, your employer must pay 12% of your pay to your retirement savings, and it’s locked up until you’re approaching retirement age with a few ways to access on the way, but very limited indeed.”
Australia’s tremendous funds are the fourth-largest retirement financial savings pool on the planet regardless of the nation’s rating because the fifty fifth largest nation by inhabitants dimension, in accordance with JPMorgan Chase.
The whole superannuation funding pool has roughly 4.5 trillion Australian {dollars} in property (roughly $3 trillion).
Employees can select from totally different tremendous funds. The funds are managed by skilled traders corresponding to monetary establishments, regulated by the federal government and are invested throughout quite a lot of international property from shares to personal fairness.
Australia’s superannuation program was launched to deal with issues about an growing older inhabitants and how to assist folks help themselves in retirement.
“With an aging population and declining birth rates, a system like this takes the fiscal burden off future generations,” Jenkins said.
Australia’s retirement system is ranked B+ on the Mercer CFA Institute Global Pension Index for 2025. Meanwhile, the United States is ranked C+.
There can be a authorities pension program that serves as a security internet for individuals who want further help. However, “super” is more and more the first retirement financial savings automobile.
In the United States, employer-sponsored retirement packages like 401(ok)s — which had been first established in 1978 — are optionally available. Employers who supply 401(ok) plans can determine whether or not they’ll match staff’ contributions.
Social Security, which was established in 1935 underneath President Franklin Delano Roosevelt, serves as the first automobile for retirement earnings. US employees pay Social Security tax, which swimming pools into a fund that’s distributed to present retirees. Concerns have been mounting that Social Security funds are on shaky grounds because the US inhabitants ages.
In normal, Australia’s obligatory employer-funded funding financial savings plan stands in distinction to the US system the place voluntary 401(ok)s are paired with the long-standing Social Security program.
It’s unclear whether or not the United States would have the ability to implement the same program to the superannuation mannequin, particularly given the politics related to altering retirement plans. Australia additionally has a inhabitants of 27 million, whereas the United States has a inhabitants of roughly 343 million.
Trump’s point out of Australia’s retirement system wasn’t the primary time it has come up in his administration. Australian tremendous funds are main traders in US property, and Treasury Secretary Scott Bessent spoke at a superannuation summit in Washington, D.C., in February, the place he touted the program’s success.
Matthew Linden, govt normal supervisor of technique and insights at Super Members Council, who attended the summit in February, said: “What has struck US officials and investors is how the strength of Australia’s super system policy settings — automatic super payments, near universal coverage and preservation of savings until retirement — have helped Australians grow world-leading retirement nest eggs.”