According to Mercer, Australia has the second best retirement system, following only Denmark. (The U.S. is ranked ninth.) One of the reasons is their “Superannuitization” pension plan, which has $1.52 trillion — or about half the assets in U.S. 401(k) plans, though the U.S. has 14 times the population. Ninety percent of Australian workers participate.
What’s Australia’s secret? Choice — or lack thereof. Workers are required to put in 9% of pay (rising to 12% in 2020), with some companies augmenting the contributions with a match. Money going in is taxed at 15%, which is lower than what most people pay, but is withdrawn tax-free. While an apples-to-apples comparison with the U.S. system may be unfair — a certain percentage of U.S. workers’ pay is deducted for Social Security — there are good lessons to be learned down under.
