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Retirement

Australian super remains the envy of Wall Street billionaire

  • September 04 2020
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Retirement

Australian super remains the envy of Wall Street billionaire

By Cameron Micallef
September 04 2020

As Australia debates the superannuation guarantee, a Wall Street billionaire has pointed out how the system helps with inequality, urging the United States to adopt a similar model.

superannuation

Australian super remains the envy of Wall Street billionaire

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  • September 04 2020
  • Share

As Australia debates the superannuation guarantee, a Wall Street billionaire has pointed out how the system helps with inequality, urging the United States to adopt a similar model.

superannuation

In his annual letter to shareholders, veteran Wall Street investor Bill Ackman advised American investors to follow a similar model to the Australian superannuation system to help all Americans enjoy the benefits of capitalism.

“Corporations could be required to set aside a fixed percent of salary or wages in a tax-free investment account for all workers that would also be restricted from withdrawal until retirement, similar to the approach used by the highly successful and popular Australian superannuation system, which has created savings of scale for growing generations of its citizens,” Mr Ackman advised investors.

The investor pointed to Australia’s system, saying building wealth in a similar way in the US would help reduce inequality that is rising in the United States.

“Since the superannuation system’s launch in 1991, Australia now has $2.7 trillion of superannuation assets – nearly twice the country’s GDP. Remarkably, Australia has created the fourth largest pension system in the world, in the 53rd most populous nation,” Mr Ackman continued. 

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Making everyone a millionaire from birth

Alternatively to introducing an Australian style superannuation system, the famed investor believes Americans could take advantage of compound interest through a payment at birth.

The government would give every child born in the US a US$6,750 retirement account at birth.

“At historical rates of equity returns of 8 per cent per annum, a $6,750 at birth retirement account – which would cost $26 billion annually based on the average number of children born in the US each year – would provide retirement assets of more than $1 million at age 65,” Mr Ackman said.

He pointed to the growing inequality as many have no opportunity to invest assets, with a system where everyone has money invested solving the problem.

“We need a program that makes every American an owner of the compounding growth in value of corporate America. Compounded returns over time are indeed one of the great wonders of the world, and every day we wait to address this issue, the problem looms larger,” Mr Ackman concluded.

Australian super remains the envy of Wall Street billionaire
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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