How Paul Keating explained our super system to Donald Trump’s administration
Donald Trump’s long and sometimes rambling State of the Union address included the first draft of his government’s plan to create a retirement plan for 50 million forgotten low-income workers. His inspiration was Australia’s superannuation system, whose chief architect Paul Keating played a key role behind the scenes.
The US model outlined by Trump uses a modified version of the Australian pension plan that Keating was called to explain to a US House congressional committee last year.
Keating’s involvement began several years ago, when the former prime minister was approached by wealthy and connected financier and philanthropist Alex von Furstenberg.
Von Furstenberg is the son of couture designer Diane von Furstenberg; Wife of media industry daredevil billionaire Barry Diller, co-founder of Fox Network, former chairman of Paramount, and former owner of the QVC home shopping cable network.
The hard-hit US family has long been looking for ways to address the lack of savings/retirement plans for nearly 50 million Americans. Most high-earning employees have what is called a 401(k) retirement plan in the United States; these are employer-sponsored.
The family called on Keating, the architect of Australia’s superannuation model, widely regarded as one of the largest and most successful superannuation models in the world, to provide a detailed diagram of how our super system works.
Through von Furstenberg/Diller’s extensive US network, details reached the White House and eventually Trump.
Keating briefed the congressional committee via a lengthy video; In this video, he explained the nature of the super plan, which is based on hedging success (which means locking the money until it reaches a certain age) and compound returns.
Keating said the White House was interested in the Australian model and was researching others for information.
Following Keating’s contribution, Kevin Hassett, Trump’s most senior economic adviser and director of the White House national economic council, met with Mark Delaney, chief investment officer of our largest superannuation fund, AustralianSuper, at the White House last year.
Delaney was questioned about how our system works as part of the US government’s investigation into the specifics of Australia’s $4.5 trillion system.
Meanwhile, the Australian system has also captured the imagination of US Treasury Secretary Scott Bessent, who attended a special retirement summit at the Australian embassy in Washington in February; Feedback here showed him saying he was impressed by the reliable growth of Australia’s superannuation funds.
In December, Trump gave the first real hint of his plan to borrow from the Australian system to sanctify the savings of low-income Americans without a retirement plan, at a press conference announcing that Michael and Susan Dell were donating $US6.25 billion ($9.5 billion) to go to children growing up in areas where the median income is below $150,000.
“There’s a certain Australian plan that people like and talk about,” he said. “There is a plan not necessarily for children, but also for people, for employees. We are looking at other things other than that,” Trump said. Trump later admitted he was talking about the Australian pension system.
“Yes, we’re looking at this very seriously. It’s a good plan. It’s worked out very well.”
According to Keating, Trump’s pension system will not be an exact copy of the Australian system; instead it will be more “inspired” by our plan.
“The wrinkle is that they said there was no way they could abolish a mandatory system like we have in place in Australia [because] Americans hate coercion,” Keating noted.
Instead, the U.S. version, still in the design phase, aims to expand the Frugal Savings Plan, the existing retirement plan currently available to government employees and veterans.
The Thrift Savings Plan is a defined-contribution retirement savings and investment plan that offers savings and tax benefits to U.S. federal employees. Trump announced that the government would match contributions up to $1,000 annually.
But the US plan will be portable, like the Australian pension system, so accounts will be linked to workers rather than employers. Workers can also move their accounts when they change jobs. And the US plan would include the facility to allow philanthropists to make charitable contributions.
Keating, the father of our supersystem, can take a bow: If imitation is the sincerest form of flattery, Donald Trump is apparently a fan.
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