President Trump recently ordered Commerce Secretary Howard Lutnick to explore Australia's retirement model as a way to reform the US retirement savings system.
It's not the first time Trump has tossed out the country's system as one that interests him. He has been dancing around it for months now.
"They have a plan in Australia, which people really like," Trump said on July 6, when he met with BlackRock CEO Larry Fink, who has been touting Australia's program for a few years.
"It's really worked out very well," Trump added. "We're going to be talking about that with Congress and see if we can implement it."
Australia's system includes superannuation funds that require employers to supplement workers' wages with contributions to privately managed pensions at a rate of 12% of employees' salaries.
There are also voluntary contributions from employers, employees, or the self-employed, paid into the private-sector plans, similar to a 401(k).
The arrangement also has a means-tested age pension, paid from general government revenue — a form of national pension — that provides extra income to retirees who don't have enough income and assets to live.
The balances are available in full at age 65 or as early as age 60 if the worker has stopped working, though there are also rules that make it difficult to tap into these accounts before retirement.
"The Superannuation Guarantee was introduced in 1992 when the country seemed like it was on the path to a retirement crisis," Fink wrote in his 2024 Annual Chairman's Letter to Investors. "Thirty-two years later, Australians likely have more retirement savings per capita than any other country."
Although it is too early to say what will come of President Trump's talk of making some changes along these lines, there's no denying that the US retirement system is a mess for many workers.
Today, the typical US worker has less than $1,000 saved for retirement, according to the National Institute on Retirement Security. For many Americans, saving for retirement starts with having an employer-provided plan, especially one that automatically enrolls workers with payroll deductions. The problem: Nearly half of US private-sector workers — roughly 56 million people — don't have access to such an account.
The US retirement system received a C+ rating from the most recent Mercer CFA Institute Global Pension Index. It ranked 29 out of 48 global pension systems assessed, mainly because Social Security is not adequately financed and many workers have no workplace retirement program.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
