So what prompted me, you might ask, in my Saturday morning tirade/dive into the history of retirement savings accounts?
Well, you’re probably not asking this, but, in fact, last week I attended (virtually) a panel discussion sponsored through the Aspen Institute, “Building a Retirement Savings System Americans Deserve. “401(k) plans were “accidental” and the move to retirement accounts was “crazy,” although, to be fair, some other commentator noted that in fact, at the height of classic pensions, there were genuine gaps in access. and portability.
And this consultation had a very engaging discussion at its core, because it brought together two panelists from outside the United States. (Of course, the moderator went to great lengths to reassure the audience that they would never question whether other countries’ Pillar 1 systems can simply offer data on social security, but, hey, take what you can get. ) Speaking from the UK was Will Sandbrook, Chief Executive of NEST Insight, the research unit of NEST’s National Savings Scheme in the UK. on the reports of that country with its issuance of an automatic registration mandate; and Australia, the Honourable Nick Sherry, former Minister for Retirement and Company Law of the Commonwealth of Australia, spoke about his retirement.
As a reminder, the UK scheme (which I introduced in 2018) is made up of automatic enrollment, for corporations that do not otherwise offer pension benefits, in a government-run national scheme, NEST, in which workers give a contribution. 3% and employers 4% of wages, with an additional 1% coming from the government in the form of tax breaks; It is possible to unsubscribe from the system, but with a limited amount of time to do so.
In Australia, the pension formula is not run by the government, but requires all employers to pay 9. 5% of salary into their employees’ retirement accounts; Initially the requirement was not a maximum, but at first it was only 3%, in 1992, and it gradually increased in the following years. (I have also described this formula, that is, in terms of whether prices came out of the employer or the employee’s pockets. )
But those two speakers presented two other perspectives on the question “how do we get from here to there?”How did those countries build their formula that many U. S. pension experts now envy?
Sandbrook says unequivocally: consensus. He pointed to a recent study recently published on his website that sought to piece together a complete history of the UK’s pension reform process (dating from 1997 to 2015), and insisted on the message that the design of the new formula was forged through consensus and an intentional effort to engage politicians on both sides. The designers sought to make the formula last, to be implemented when the opposing party came to power, and, he reported, the design and implementation lasted for periods of which and then the other party was in power.
Sherry, on the other hand, told a different story with respect to Australia. Prefacing his comments with an observation that that country, due to its convict-transportation past, is much more accepting of government mandates (mentioning both the mandatory voting and the speed with which that country moved from relatively loose to extremely tight gun regulations) than other “Western” countries, he described the implementation of mandatory Superannuation benefits as being imposed top-down, without any consensus building and with polling evenly divided between support and opposition. In fact, the party in power nearly lost re-election, and only in the longer-term, after workers began to see account balances build up, did they begin to respond more favorably, with support now standing at 85%.
Which of those techniques is correct? It’s wrong? Are any of those people’s perceptions of their country’s reporting completely accurate, or would others question them? It is also worth noting that Sandbrook is under pressure on the importance of being consistent with the country’s “history of political economy and social welfare” and, indeed, the Australian technique of imposing mandates, even if it is the personal sector, fits with the culture of this country, according to Sherry.
At any rate, at this point, the moderator started taking questions/comments from the audience. One of those comments? “I think we do have broad consensus already.”
Wow.
I didn’t notice who this specific speaker was, however, the moderators continually referred to other sessions in a closed group. Has this stakeholder been so immersed in discussions with others where it is evident that employers’ participation in retirement savings deserves to be mandatory?, as soon as possible, that the importance of acceptance from others has been overlooked?Not to mention the desire to continue comparing all applicable knowledge to determine if this is the right answer in the first place.
And yes, I agree with that savings mandate, as a complement to a social security system that has not changed at all, but as a component of a more comprehensive reform of the system, in line with the adjustments made through the United Kingdom, in parallel with its NEST. program – the kind of adjustments that seem completely out of place in those kinds of discussions in the United States.
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