Trump Praised Australia’s Retirement System—Why It’s Hard to Copy

While President Donald Trump in December 2025 called Australia’s retirement savings system “a good plan” that had “worked out very well,” it remains unclear in January how much significance the retirement industry should attach to the comments.

“We’re looking at it very seriously,” Trump said, hinting the U.S. might learn something from a country whose retirement system now holds more than $3 trillion—roughly 140% of Australia’s annual economic output—a figure that is projected to increase.

What Trump appeared to be admiring was Australia’s superannuation system—known simply as “super”—a compulsory, employer-funded retirement program that covers nearly the entire workforce and requires companies to contribute 12% of workers’ wages into professionally managed retirement funds. The system has been in place, in one form or another, since the early 1990s and has quietly transformed Australia’s retirement accounts into one of the world’s largest pools of long-term investment capital.

For American policymakers long frustrated by uneven retirement coverage and inadequate savings, the comparison is tempting. But experts on both sides of the Pacific Ocean caution that while the Australian model offers powerful lessons, transplanting it wholesale into the U.S. system would be extraordinarily difficult—politically, legally and culturally.

A System Built on Compulsion, Scale

Australia’s retirement approach can be described quite plainly: compulsion. Nearly every worker in the formal labor market is covered, and employers are legally required to make contributions on their behalf, regardless of whether employees themselves save an additional dollar.

“The compulsory nature isn’t just symbolic—it’s comprehensive,” says Gregg McClymont, executive director of European public affairs at IFM Investors, which manages money on behalf of Australian industry super funds and is owned by 16 Australian super funds and the U.K.’s National Employment Savings Trust. “It covers essentially everyone in the workforce, and the contributions come from employers, not employees.”

According to the Association of Superannuation Funds of Australia, 77% of Australian adults had a superannuation fund as for 2023, although they are only held by 54% of those making less than A$50,000 (about $33,450) per year.

That structure has produced extraordinary scale. Australia’s superannuation assets now exceed those of much larger countries on a per-capita basis, making the system the fifth-largest retirement pool globally. Large, multi-employer “industry funds” dominate the landscape, allowing for low fees, professional governance and significant investment in private markets, infrastructure and global assets.

By contrast, the U.S. relies on a voluntary, employer-sponsored patchwork of 401(k) plans and individual retirement accounts. Roughly 55% to 60% of American workers have access to a workplace retirement plan, and participation rates are lower among low-income and part-time workers. Employer contributions are optional, typically capped at matching 4% to 6% of pay—far below Australia’s mandated level.

Who Holds the Fiduciary Duty?

Another fundamental difference lies in governance. In Australia, fiduciary responsibility sits with independent trustees who manage superannuation funds under federal trust law. Employers’ obligations are limited largely to making required contributions on time.

“We moved the fiduciary away from the employer decades ago,” says Duncan McPherson, founder of Sydney-based Borromean Consulting. “That separation is critical. It enables portability, consolidation and professional oversight in a way that’s very hard to replicate in the U.S.”

In the U.S., by contrast, employers sponsoring 401(k) plans typically serve as fiduciaries under federal law, exposing them to legal liability for investment choices and plan design decisions. That framework—particularly the threat of litigation in reaction to any potential investment loss—has made many employers cautious and has limited experimentation with new asset classes or higher default contribution levels.

Dennis Simmons, executive director of the Committee on Investment of Employee Benefit Assets, said that employer “ownership” of plans remains a defining feature of the American system. “That voluntary structure creates real engagement,” he says, “but it also leaves enormous gaps in coverage.” 

Social Security vs. the Age Pension

The Australian system also interacts differently with public retirement benefits. Australia’s Age Pension—akin to Social Security—includes a means test: Retirees’ income, superannuation account balances and other assets are checked, and the more they have, the less they receive from the government.

That design, experts say, reinforces incentives for individuals to save, while reducing long-term fiscal pressure on the government. “If your objective is to take pressure off Social Security, means-testing matters,” McPherson says.

In the U.S., Social Security benefits are broadly universal, with only modest reductions for higher-income retirees. Any move toward compulsory private savings would therefore raise politically sensitive questions about benefit offsets and redistribution.

Unfinished Business: Retirement Income

For all its strengths, experts emphasize that Australia’s system is far from perfect. While superannuation excels at accumulation, it struggles at decumulation—the phase when retirees must live off of their savings.

Most Australians withdraw money gradually from account-based pensions, often underspending out of fear of running out of money, says Stephen Huppert, an Australia-based consultant and adviser who operates his own firm. Huppert says many retirees withdraw only the minimum required, leaving large balances untouched even late in life.

“The irony is that both systems converge at retirement,” says John Mitchem, a U.S.-based principal in JM3 Projects and a strategic consultant for financial stakeholders. “Australians and Americans alike are largely on their own when it comes to drawing down savings.”

Policy debates in Australia now focus on default retirement income products, digital advice and potential government-facilitated annuities, Huppert says—issues the U.S. is also beginning to confront at scale.

What Could the U.S. Learn From Down Under?

Most experts agree that the U.S. is unlikely to adopt a mandatory 12% employer contribution anytime soon. But incremental borrowing of plan features from the superannuation system is already underway.

Automatic enrollment and automatic contribution escalation—once controversial—are now standard features of many 401(k) plans, pushing participation and savings rates higher. State-run auto-IRA programs, which require employers to offer payroll-deduction savings, have been enacted in 20 states, many of which mandate that private sector employers either offer a qualified retirement plan or enroll employees in the state-run program.

As of November 30, 2025, 17 states have enacted auto-IRA programs, according to the Georgetown University Center for Retirement Initiatives.

“The U.S. and Australia are slowly evolving toward each other,” Mitchem says. “They’re nudging participation; we’re debating flexibility.”

Members of Congress have consistently floated bills to automatically enroll participants into retirement plans each year if they have opted out in the past, while still allowing them to opt out again if they choose. Other bills have tried to lower to 18 from 21 the age at which an employer that offers a retirement plan must make the plan available to employees.

Admiration Meets Reality

Trump’s comment may have been off-the-cuff, but it underscored a growing recognition that the U.S. system leaves too many workers behind. Australia’s experience shows what compulsion, scale and long-term policy consistency can achieve.

Yet it also highlights the trade-offs: reduced employer discretion, higher labor costs and a more paternalistic role for government.

“There’s no way you re-engineer a retirement ecosystem overnight,” Mitchem says. “But the lesson is clear: automatic, universal savings works. The question is how much coercion Americans are willing to tolerate to get there.”

As McClymont put it, “Superannuation didn’t happen because everyone loved it at the start. It worked because it was gradual, compulsory—and then it became normal.”