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Trump orders review of Australia’s superannuation model for US retirement reform
Australia’s system relies on mandatory employer contributions of 12% of workers’ salaries into privately managed pensions, plus a means-tested government age pension.
President Trump has ordered Commerce Secretary Howard Lutnick to explore Australia’s retirement model as a potential template to reform the US retirement savings system, according to Yahoo Finance. The push comes after Trump met with BlackRock CEO Larry Fink, who has backed Australia’s program.
Australia’s approach combines employer-mandated superannuation contributions of 12% of employees’ salaries into privately managed pensions, with additional voluntary contributions from employers, employees, or the self-employed that resemble 401(k) style accounts. The system also includes a means-tested age pension funded from general government revenue for retirees whose income and assets fall short.
The account balances are generally available in full at age 65, or as early as 60 if a worker has stopped working, though rules make it difficult to access funds before retirement. Yahoo Finance notes that BlackRock’s Larry Fink wrote that the superannuation guarantee was introduced in 1992, and that 32 years later Australians likely have more retirement savings per capita than any other country.
In the US, Yahoo Finance cites the National Institute on Retirement Security, saying the typical worker has less than $1,000 saved for retirement and that nearly half of US private-sector workers, about 56 million people, do not have access to an employer-provided retirement plan with automatic payroll deductions. The article says it is too early to know what, if anything, will result from Trump’s proposal.