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Speaker 1: Bloomberg Audio studios, podcasts, radio news.

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Speaker 2: All around the world right now, an economic crisis is festering.

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Speaker 2: It's a slow moving disaster that almost nobody seems to

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Speaker 2: have figured out how to address, but also a problem

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Speaker 2: that no country can afford to ignore, and attempts to

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Speaker 2: do anything about it have not gone well. The crisis

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Speaker 2: retirement and the tape you just heard the French retirement

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Speaker 2: related protests have popped up across the world in the

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Speaker 2: last few years, but the ones in France last year

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Speaker 2: were particularly dramatic. Tens of thousands of Parisians took to

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Speaker 2: the streets to protest President Emanuel Macrone's efforts to raise

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Speaker 2: the retirement age from sixty two to sixty four. Bloomberg

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Speaker 2: talked to a few of them.

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Speaker 3: My name is Jule, I'm twenty one years old.

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Speaker 4: We consider that's the government want to make us work

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Speaker 4: until this is scandalous.

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Speaker 1: Alarm and I also seventy one ensoridarity with that, young people.

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Speaker 3: It's a very bad ory firm. It's not the time,

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Speaker 3: it's not a good ida.

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Speaker 1: My my name is Matthew. I'm forty seven years old.

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Speaker 1: I'm an English teacher, and we're protesting because we don't

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Speaker 1: want to spend the rest of our life just working

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Speaker 1: without retirement.

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Speaker 2: Despite the massive backlash, Macron and the French government held

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Speaker 2: firm they were facing an economic problem. Countries all across

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Speaker 2: the world are grappling with their populations are getting older

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Speaker 2: and living longer, and it's costing more and more public

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Speaker 2: money to support them all after they stop working. It's

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Speaker 2: related to what some people call the silver tsunami.

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Speaker 5: Yes, the silver tsunami. It's a global phenomenon. So the

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Speaker 5: number of people that are in the workforce versus the

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Speaker 5: number of people that are now leaving the workforce, this

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Speaker 5: is a really big challenge.

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Speaker 2: That's Bloomberg's Amy Bainbridge lives works in Australia, the one

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Speaker 2: country that might have actually created a defense against the

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Speaker 2: silver tsunami. They call it the supersystem. That's not a

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Speaker 2: value judgment. It's short for super annuation. And can you

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Speaker 2: just tell us what super annuation means? Why is this

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Speaker 2: system called that?

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Speaker 3: That's such a good question.

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Speaker 5: Actually, I've never really gotten to the bottom of exactly

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Speaker 5: why we use this actual name, because really it's it's pensions.

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Speaker 2: It sounds so grand.

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Speaker 3: It's a super annuation it's absolutely.

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Speaker 2: Today on the show Australia's Supersystem, How it works and

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Speaker 2: what the rest of the world can learn from it.

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Speaker 2: I'm Sarah Holder and this is the big Take from

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Speaker 2: Bloomberg News. Amy is based in Melbourne, where she reports

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Speaker 2: on Australia's trillion dollar pension and retirement system. She's also

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Speaker 2: part of it. Do you remember signing up yourself and

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Speaker 2: can you walk us through what that felt like?

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Speaker 5: So one of my first proper jobs, I was still

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Speaker 5: at university that I worked at a local newspaper as

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Speaker 5: a copy kid, and I was just put automatically into

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Speaker 5: a superannuation fund. And I just remember receiving the paper

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Speaker 5: at the time and just not really understanding what it

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Speaker 5: was all about, but also being a bit irritated to

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Speaker 5: see that this money was going somewhere and that I

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Speaker 5: couldn't access it.

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Speaker 2: At the time, Amy says she wasn't looking at the

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Speaker 2: big picture, but now she's grateful she didn't have a

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Speaker 2: choice about whether her money was being saved for retirement.

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Speaker 5: And now I think, oh gosh, I'm so glad we

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Speaker 5: have this compulsory system sometimes because I don't know that

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Speaker 5: I necessarily would have made a great decision you know

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Speaker 5: earlier in my career where money is not.

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Speaker 3: Money's pretty skinned.

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Speaker 2: But it wasn't her decision to make. In Australia, if

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Speaker 2: you work even part time, your employer has to set

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Speaker 2: extra money aside into a retirement fund in your name.

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Speaker 2: It's because of a system that was put in. Please

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Speaker 2: not all that long ago.

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Speaker 3: I'll take you back to like the nineteen eighties.

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Speaker 2: Back then, Australia's economy was struggling, infleetion was rising and

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Speaker 2: people were watching their retirement savings go up and smoke.

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Speaker 2: Workers were hurting. So some of the country's most powerful

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Speaker 2: unions took on the issue. They struck a deal with

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Speaker 2: their employers. Instead of a salary hike, employers would pay

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Speaker 2: a portion of each worker's wages into a retirement fund.

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Speaker 3: I've spoken to.

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Speaker 5: People that were involved at the time, and they went

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Speaker 5: workplace by workplace in their negotiations, and then some superannuation

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Speaker 5: funds were set up as we call them, to cater

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Speaker 5: for those workers.

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Speaker 2: Amy says. The idea spread sector by sector.

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Speaker 5: Particularly started in the building and construction industry to get

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Speaker 5: superannuation as part of broader wage negotiation. So then it

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Speaker 5: was transport and health and community services and hospitality sectors.

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Speaker 5: And then there was this huge shift where there was

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Speaker 5: national legislation a few years later that took effect in

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Speaker 5: nineteen ninety two.

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Speaker 2: The legislation required all employers to contribute to the retirement

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Speaker 2: pension system for all workers. Paul Keating, a former Treasurer,

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Speaker 2: was the Prime Minister back then. He had championed the

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Speaker 2: plan and here he is talking about it in Parliament

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Speaker 2: just after it passed to.

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Speaker 4: Speaker of this House last night passed the Superinnuation Guarantee levy,

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Speaker 4: and doing so it has entrenched in legislation a great

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Speaker 4: reform which will be of great benefit to coming generations

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Speaker 4: of Australia.

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Speaker 2: You can hear how proud he is of the policy,

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Speaker 2: even in the face of some jeering from his opposition.

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Speaker 6: Let's to speak, for the first time in our history,

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Speaker 6: well in advance of reform in other advanced industrial countries,

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Speaker 6: ordinary Australians will be able to build a decent nest

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Speaker 6: egg for their retirement as a result of the policies

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Speaker 6: of the labor movement.

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Speaker 2: So the system was in place and at first employers

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Speaker 2: were only required to put a little bit aside.

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Speaker 5: It was the equivalent of three percent of worker wages.

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Speaker 5: But that has steadily grown over the years. Now it's become,

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Speaker 5: you know, a very stable system, and it's growing at

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Speaker 5: a really fast rate.

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Speaker 2: Today the rate is eleven percent and it'll go up

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Speaker 2: to twelve percent by next July. Keep in mind this

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Speaker 2: is on top of a salary. So come July twenty

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Speaker 2: twenty five, if a worker in Australia is being paid

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Speaker 2: one hundred thousand dollars per year, their employer will have

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Speaker 2: to put an additional twelve thousand dollars into a retirement

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Speaker 2: fund of the worker's choosing. There's a whole menu of

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Speaker 2: investments to choose from. Some funds are high risk, high reward,

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Speaker 2: Others are slow, safe and steady. Others focus on environmental impact.

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Speaker 2: And after thirty two years, many of the companies that

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Speaker 2: run those funds have gotten huge. How big are they?

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Speaker 2: It seems like if Australia has this well humming pension

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Speaker 2: system that's putting a lot of money aside every month,

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Speaker 2: these funds must be pretty significant.

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Speaker 3: They are, yes, they absolutely are.

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Speaker 1: So.

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Speaker 5: The biggest fund Australia has is called Australian Super It

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Speaker 5: has three hundred and thirty billion Australian dollars under management,

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Speaker 5: So they are getting big.

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Speaker 2: If you pull all the funds together. Australia's retirement system

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Speaker 2: is the fourth largest in the world. It's also the

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Speaker 2: fastest growing.

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Speaker 5: From twenty two to twenty twenty two under the data

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Speaker 5: that we've been given, our system grew by six hundred

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Speaker 5: and thirty one percent. The assets are forecast to top

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Speaker 5: thirteen trillion dollars by twenty forty eight.

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Speaker 2: So if Australia's supersystem is so flush, why are many

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Speaker 2: aging Australians still worried they won't have enough? That's after

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Speaker 2: the break. We're back. Before the break, we looked at

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Speaker 2: the creation of Australia's pension fund, which some experts see

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Speaker 2: as a possible solution to a looming retirement crisis. Over

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Speaker 2: the next three decades, the global gap between what retirees

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Speaker 2: have set and what they'll need to live is projected

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Speaker 2: to reach four hundred trillion dollars. That's larger than the

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Speaker 2: entire global economy. The problem has also caught the attention

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Speaker 2: of some of the world's biggest financial institutions.

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Speaker 1: Over the past year, I heard more and more conversation

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Speaker 1: about retirement or retirement crisis from many parts of the world,

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Speaker 1: from middle class developing countries to developed countries.

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Speaker 2: Larry Fink, CEO of the investment giant Blackrock, wrote about

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Speaker 2: this issue in his annual letter, and he came on

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Speaker 2: Bloomberg to talk about it.

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Speaker 1: We're aging, We're you know, we're all living longer, and

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Speaker 1: I think there's not a dialogue in America or most

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Speaker 1: places about can't we afford that longevity? And our entire

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Speaker 1: retirement system was based on statistics that were created fifty

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Speaker 1: years ago, whereby most Americans retired between sixty and sixty

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Speaker 1: two then, but most Americans then passed away at sixty seven,

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Speaker 1: and today statistically a couple of sixty years old in

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Speaker 1: good health. What I'm going to live over ninety?

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Speaker 2: Think mentions Australia's model as a possible solution for the issue,

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Speaker 2: and he's not the only one. Amy told us that

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Speaker 2: Paul Schroeder, the CEO of Australia's biggest fund, gets asked

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Speaker 2: for advice all the time.

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Speaker 5: So he and others I've spoken to regularly getting phone

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Speaker 5: calls from people in the US at varying levels of

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Speaker 5: government or in varying levels of the financial industry and

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Speaker 5: in the UK saying, so, you know, how did you

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Speaker 5: do it? And Paul Schroeder said to me, the best

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Speaker 5: time to do this was thirty years ago.

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Speaker 3: So it's not great news really, Okay, oh, but we know.

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Speaker 5: I've spoken to the pensions regulator in the UK and

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Speaker 5: they really see the compulsory nature of our system as

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Speaker 5: being a real look into the future.

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Speaker 2: Another reason UK regulators might envy Australia's supermodel it takes

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Speaker 2: a lot of pressure off the country's public pension system.

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Speaker 2: By twenty thirty, Australia is projected to spend two point

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Speaker 2: four percent of its GDP on retirement benefits. The US

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Speaker 2: is projected to spend more than twice that and the

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Speaker 2: UK nearly three times as much, and that gap is

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Speaker 2: only projected to widen in future decades. But Australia's system

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Speaker 2: still has its challenges. It was put in place thirty

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Speaker 2: years ago, after all, who works and the way they

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Speaker 2: work have changed profoundly since then.

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Speaker 5: One of the big bug bears I guess of one

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Speaker 5: of the industry associations is that when superannuation was set up,

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Speaker 5: it was basically designed for a man, usually a person

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Speaker 5: but a man who had an unbroken career, working full

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Speaker 5: time for their entire career, and then you retire and

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Speaker 5: you have a nice savings. But the reality is that, well,

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Speaker 5: that happens for some people. For a lot of people,

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Speaker 5: it doesn't. Some industries, you know, you simply get paid less,

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Speaker 5: and so what happens to those people, they're just naturally

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Speaker 5: not going to have as big a balances. You need

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Speaker 5: to make sure that it's easier for people to make

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Speaker 5: additional contributions where they can, if you have a broken

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Speaker 5: white pattern, if you need to care for others in

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Speaker 5: your family and take time out of the workforce.

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Speaker 2: One of the ways the supersystem reinforces pay disparities is

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Speaker 2: along gender lines. The average balance for every age group

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Speaker 2: is lower for women.

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Speaker 5: Now that's partly because there is a gender pay gap here.

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Speaker 5: And the way that retirement savings are calculated is as

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Speaker 5: a percentage of somebody's income. So of course, if you

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Speaker 5: earn less, you're going to have less retirement savings. But

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Speaker 5: also if you say, take a pause from your career

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Speaker 5: or your work part time, which a lot of women

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Speaker 5: do here in Australia, then that can impact the balance overall.

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Speaker 2: So how much money are individual Australians getting from the

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Speaker 2: supersystem when they retire.

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Speaker 5: We've done some calculations here at Bloomberg and People. There's

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Speaker 5: still about two thirds of people or all accounts, people

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Speaker 5: who are like in the sixty to sixty four age

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Speaker 5: bracket that have less than two hundred thousand Australian dollars.

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Speaker 2: Two hundred thousand Australian dollars is about one hundred and

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Speaker 2: thirty thousand US dollars.

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Speaker 5: It's actually not a lot when you think that you're

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Speaker 5: still going to have to live for another few decades.

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Speaker 2: The system is expected to get better for younger generations,

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Speaker 2: who will spend more of their working life with employers

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Speaker 2: putting more money aside.

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Speaker 5: So I guess the hope will be that in coming

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Speaker 5: years those balances really will start to reap the benefits

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Speaker 5: of having this higher contribution rate of twelve percent, which

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Speaker 5: will be in the middle of next year, and really

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Speaker 5: fueling that savings as well as hopefully decent investment returns

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Speaker 5: for people, depending of course, on which investment option they're in.

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Speaker 2: Amy told US industry experts are advocating for better financial

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Speaker 2: education that could help people make their money last longer,

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Speaker 2: but it can be hard to give useful standardized guidance.

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Speaker 2: Circumstances and expenses are really different for different people, and

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Speaker 2: cost of living can vary a lot.

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Speaker 5: So it's really difficult here for people to get the

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Speaker 5: advice they need and to be pointed in the right direction.

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Speaker 5: It's something that the industry says. I mean, I've spoken

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Speaker 5: to so many executives that all say we've been greater

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Speaker 5: at accumulating money. But actually the next bit is the

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Speaker 5: really big challenge is how do you get people educated

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Speaker 5: on how much money they need making additional contributions perhaps

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Speaker 5: during their working life, but also how to make that

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Speaker 5: money last and what you should do or what your

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Speaker 5: strategy could be to make sure you don't run out

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Speaker 5: too quickly.

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Speaker 2: Australia's retirement system not perfect, but better off than most.

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Speaker 2: The main secret to its success so far don't make

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Speaker 2: saving a choice for companies or for workers. Force people

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Speaker 2: to save. It might not be enough, but it is

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Speaker 2: a start. This is the big take from Bluebird News.

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Speaker 2: I'm Sarah Holder. This episode was produced by David Fox,

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Speaker 2: who was edited by Stacy Vennix Smith and Janet Paskin.

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Speaker 2: It was mixed by Alex Subura. It was fact checked

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Speaker 2: by Jessica Beck. Our senior producer is Naomi Shaven. Our

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Speaker 2: senior editor is Elizabeth Ponso. Nicole bimsterbor is our executive producer.

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Speaker 2: Sage Bauman is our head of podcasts. Thanks for listen,

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Speaker 2: Please follow and review The Big Take wherever you listen

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Speaker 2: to podcasts. It helps me listeners find the show. We'll

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Speaker 2: be back tomorrow.