Washington D.C. – A key element of President Donald Trump’s recent proposals for a new pension plan for low-income Americans traces back to Australia’s highly regarded superannuation system. The initiative, outlined in his State of the Union address, drew heavily on the expertise of former Australian Prime Minister Paul Keating, who provided detailed explanations of the system to U.S. Officials.
The U.S. Plan, still in its development phase, aims to address the lack of retirement savings for approximately 50 million Americans. It’s a modified version of the Australian superannuation scheme, a system lauded internationally for its success in bolstering retirement security. Keating’s involvement began several years ago, initiated by financier and philanthropist Alex von Furstenberg, son of designer Diane von Furstenberg and media mogul Barry Diller.
The Keating Briefing
Von Furstenberg, through his family’s extensive network, connected Keating with White House officials. Keating then briefed a U.S. House of Representatives congressional committee via a detailed video presentation. He emphasized the core principles of the Australian system: preservation – locking funds until retirement – and the power of compound returns. According to Keating, the White House subsequently sought further information on the Australian model.
This interest led to a meeting between Kevin Hassett, Trump’s senior economic advisor and director of the White House National Economic Council, and Mark Delaney, chief investment officer of AustralianSuper, Australia’s largest superannuation fund. Delaney was questioned extensively about the mechanics of the $4.5 trillion Australian system, as reported by CNN. U.S. Treasury Secretary Scott Bessent too demonstrated interest, attending a superannuation summit at the Australian embassy in Washington in February, where he reportedly expressed his admiration for the reliable growth of Australian pension funds.
A System Inspired, Not Replicated
Trump first publicly hinted at his consideration of the Australian system in December during a press conference, coinciding with the announcement of a $6.25 billion donation from Michael and Susan Dell. “There’s a certain Australian plan that people are liking, and they’re talking about,” Trump said. “There’s a plan where – not for children necessarily, but for people, working people. And we are looking at other things different from this.” He later confirmed he was referring to the Australian superannuation system, stating, “Yeah, we’re looking at it very seriously. It’s a good plan. It’s worked out very well.”
However, the U.S. Version won’t be a direct copy. Keating noted that a compulsory system, like Australia’s, would likely face resistance in the United States, stating, “The wrinkle is they said there was no way they would get up a compulsory system like we have in Australia [because] Americans hate compulsion.” Instead, the U.S. Plan is envisioned as an extension of the existing Thrift Savings Plan, a retirement savings plan already available to government workers and veterans. The Thrift Savings Plan offers tax benefits and is a defined contribution plan, meaning benefits are based on contributions and investment returns. Trump has proposed a government match of up to $1,000 annually.
Like Australian superannuation, the proposed U.S. System would be portable, allowing workers to maintain their accounts even when changing jobs. It would also incorporate a mechanism for philanthropic contributions. Australia’s system requires employers to contribute the equivalent of 12% of an employee’s income into these super funds – a gradual increase from 3% when the modern superannuation program was established in 1992, as detailed by Yahoo Finance.
The Australian system, currently the fourth-largest retirement savings pool globally despite Australia’s relatively slight population, has garnered attention for its success. According to JPMorgan Chase, it holds roughly 4.5 trillion Australian dollars in assets (approximately $3 trillion).
Paul Keating’s role in shaping this potential shift in U.S. Retirement policy underscores the global recognition of Australia’s superannuation model. As the U.S. Plan moves through the design phase, the details of its implementation and potential impact on millions of Americans will be closely watched. The next step involves further legislative debate and refinement of the proposal, with a focus on ensuring its feasibility and effectiveness within the American economic landscape.
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