Contained in Donald Trump’s long and sometimes rambling State of the Union address was the early sketch of his government’s plan to create a pension plan for 50 million forgotten low-income workers. His inspiration was Australia’s superannuation system and its key architect, Paul Keating, played a major role behind the scenes.
The US model that Trump outlined is using a modified version of the Australian superannuation scheme, which Keating was called on to explain to a US House of Representatives congressional committee last year.
Keating’s involvement had begun several years earlier when the former prime minister was approached by the wealthy and connected financier and philanthropist Alex von Furstenberg.
Von Furstenberg is the son of couture designer Diane von Furstenberg – the wife of media industry stalwart billionaire Barry Diller, co-founder of Fox Network, former chairman of Paramount and former owner of the QVC home shopping cable network.
The heavy-hitting US family had long been interested in ways to address the lack of a savings/pension plan among about 50 million Americans. Many higher salaried workers have what in the US is called a 401(k) pension plan; these are employer-sponsored.
The family sought out Keating – architect of Australia’s superannuation model, which is widely recognised as one of the largest and most successful in the world – to provide a detailed schematic of how our super system operates.
Through the von Furstenberg/Diller extensive US network, details made it to the White House and, ultimately, to Trump.
Keating briefed the congressional committee via a long-form video, in which he explained the nature of the super scheme that relied for its success on preservation (which means locking up money until you reach a certain age) and compound returns.
Keating said the White House picked up interest in the Australian model and had been canvassing others for information.
On the back of Keating’s contribution, Trump’s most senior economic adviser and director of the White House national economic council, Kevin Hassett, met at the White House last year with Mark Delaney, chief investment officer of our biggest superannuation fund, AustralianSuper.
Delaney was grilled about how our system worked as part of the US government’s investigation into the features of Australia’s $4.5 trillion system.
The Australian system had meanwhile also captured the imagination of US Treasury Secretary Scott Bessent, who attended a special superannuation summit in February at the Australian embassy in Washington, where feedback suggested that he said he was impressed by the reliable growth of Australia’s pension funds.
In December, Trump provided the first real hint of his plan to borrow from the Australian system to enshrine the savings of lower income Americans without a pension plan, during a press conference that unveiled a $US6.25 billion ($9.5 billion) donation from Michael and Susan Dell to go to children growing up in areas where the median income was below $US150,000.
“There’s a certain Australian plan that people are liking, and they’re talking about,” he 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,” Trump said. Trump later agreed that he was speaking about the Australian superannuation system.
“Yeah, we’re looking at it very seriously. It’s a good plan. It’s worked out very well.”
Trump’s pension system won’t be a precise facsimile of the Australian system – it would instead be more “inspired” by our scheme, according to Keating.
“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,” Keating noted.
Rather, the US version – which is still in its design phase – is looking to extend the existing pension plan that is already available to government workers and veterans, the Thrift Savings Plan.
The Thrift Savings Plan is a defined contribution retirement savings and investment plan that offers US federal employees savings and tax benefits. Trump declared that the government would match contributions with up to $US1000 annually.
But the US scheme, like Australian superannuation, would be portable, so the accounts will be attached to the workers rather than the employers. Workers could move their accounts when they moved jobs. And the US scheme would include the facility to allow philanthropists to make charitable contributions.
Keating, the father of our super system, can take a bow: If imitation is the sincerest form of flattery, it seems Donald Trump is a fan.
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