Australia's superannuation system: Model for United States social security reform

Starting in the mid-1980s, Australia began implementing a system of compulsory private retirement savings, called superannuation, that is expected to yield three distinct benefits for Australia. First, a private savings requirement will generate a stock of wealth capable of generating significantly more retirement income than was available from the government. Second, the level of required deposits in the superannuation funds is expected to increase national savings by more than 3.0 percent of GDP and therefore economic output. Finally, since government benefits are only provided on a means-tested basis, the long-term budgetary savings of privatization will exceed 2.0 percent of GDP. Simulating the long-term impact of an Australian-type reform in America, using a model comprised of 1044 representative households, median retirement income would more than double, the burden of government would shrink by more than 5.0 percent of GDP, and national savings would climb by 3.0 percent of GDP.