Adverse circumstances instill special attitudes in people. The savings and retirement system in The Netherlands has usually been very safe and secure, a result I attribute to most of the country's land being under sea level and requiring all sorts of protective measures to keep their houses from floating away.
Australia has lately been very cautious with its retirement program as well. It hasn't always been that way; in the early 1980s someone in the government had the insight to look ahead at the state of savings and retirement, and a few years later a new "superannuation" program was in place, requiring savings of nine percent per year from all workers. As noted, that has been increased to 12 percent.
The measures will "boost private savings by 0.4 percent of GDP," Rudd said in a speech in Sydney today [reports Bloomberg]. "The reforms will also ease long-term pension pressures on the commonwealth budget."But employers are not happy about their increased contributions:
The Australian Chamber of Commerce and Industry estimates the tax increase will cost A$20 billion to $23.6 billion a year, paid for by Australia's one million employers and small businesses, Chief Executive Officer Peter Anderson said in an e- mailed statement yesterday.
"The superannuation levy increase is the biggest new taxing measure in the government response," he said.
"It is not good news for employers," Partner Paul Motta at BDO Australia, a unit of the world's fifth-biggest accounting group BDO International, said in an e-mailed statement yesterday. The government was also "wrong" to ignore [Treasury Secretary Ken] Henry's recommendation that the tax on pension fund investment earnings be cut in half to 7.5 percent, he said.Nobody likes saving very much, it seems.
The move also will build the pools of capital native to the Australian economy, and the portfolio manager expects a boost for antipodean banks and asset managers:
"The sheer size of the pool of funds under management means that this country, and this city in particular, becomes a natural take-off point to make Australia a natural financial services hub for wider East Asia," Rudd said today in reference to Sydney.It's a chance to pull ahead of the Europeans and Americans who for years will be preoccupied with piecing together their financial systems, at great cost.
It's not as though 12 percent is an outrageous number -- that's what financial planners tell us we need to save to fund our own retirements, and it's easy enough to prove that's true. In a world where employers and the government are backing away from funding our golden years, Australia makes a great example.
I have a daily reminder of Australian conservatism and longevity -- my feathered friend Griffin:
He is a cockatoo, and his people hail from Australia. (You won't believe me, but this photo was not staged; I found him looking at the Journal one morning.) I'm told they fly around in huge flocks down there, and take up residence in peoples' backyards and dine in farmers' fields.
But they live to be 80 years old or so in the wild. True, he doesn't save, and doesn't even have to work much, but the Australians seem to know what it takes to survive.
See a related post where I make the case for a possible increase to the U.S. retirement age.