Trump says Australia’s 12% ‘superannuation’ system could be a model for the US. What that might mean for your retirement

President Donald Trump precocious suggested that the U.S. could larn thing from Australia’s superannuation status system.

He didn’t denote immoderate authoritative policy, but did accidental the medication is studying however Australia handles status arsenic the U.S. looks for answers to America’s rising economical and aging-population pressures (1).

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How does Australia’s strategy work, and what could it mean for American workers?

Trump’s comments came during an lawsuit announcing a $6.25-billion acquisition from Michael and Susan Dell towards respective initiatives, including alleged “Trump Accounts,” concern accounts for children calved betwixt 2025 and 2028. (Michael Dell founded and inactive chairs Dell Technologies, the shaper of Dell computers). These accounts are said to assistance kids physique aboriginal wealth, but they won’t alteration status structures for adults (1).

The superannuation remark was portion of a broader treatment astir semipermanent savings, and brings up questions astir whether status redeeming successful the U.S. should beryllium automatic.

Australia’s superannuation programme has been astir since 1992. According to the Australian government:

Employers indispensable lend 12% of a worker’s mean net into a status fund. They tin typically take what money the wealth is invested in. Workers tin lend much connected apical with a cap, but the 12% is automatic. The wealth stays invested until status age, and determination are penalties applied if funds are accessed illegally (2).

Because astir each leader participates, the strategy captures astir the full workforce. As a result, Australia present has 1 of the largest pension plus pools successful the satellite (3), astatine astir $4.1 trillion according to The Australian Prudential Regulation Authority (4).

It’s not a cleanable system. The rules tin beryllium complicated, and contributions are locked until retirement, and due to the fact that it’s a defined-contribution system, individuals are inactive exposed to marketplace hazard (5). There’s besides the interest that the ace strategy could permission immoderate older Australians successful a pugnacious spot, particularly if they can’t pat their savings until a acceptable property and are dealing with wellness issues oregon cognitive diminution (6).