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Paul Keating’s 12% Superannuation Vision Transforms Australia’s Retirement

Paul Keating’s vision for superannuation in Australia, proposed 34 years ago, is finally coming to fruition. The 12 per cent superannuation guarantee, set to benefit millions of workers, is a testament to Keating’s foresight and legacy. Keating, a key figure in the development of Australia’s retirement savings system, has described superannuation as a unifying force among Australians.

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The journey towards universal superannuation began in 1985 when the ACTU advocated for a portion of workers’ wages to be allocated to retirement funds. Keating, while in opposition, outlined the blueprint for Australia’s retirement savings system, emphasizing the need for a combination of the age pension and private superannuation contributions. His proposal of a 12 per cent contribution rate aimed to secure a comfortable retirement for all workers.

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Over the years, the super guarantee levy steadily increased, reaching 12 per cent in the 2025-26 financial year. Keating’s vision has materialized into a robust superannuation system, with Australia boasting the fourth-largest retirement savings pool globally, valued at $4.1 trillion, equivalent to 150 per cent of GDP.

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The significance of superannuation extends beyond individual savings, playing a pivotal role in the nation’s economic landscape. Keating likened it to a national economic family, akin to Medicare, with superannuation contributions shaping Australia’s economic future. The Reserve Bank projects that Australia’s super assets will double to $8 trillion by 2035, positioning the country as a global leader in retirement savings.

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However, proposed changes to tax arrangements on super accounts exceeding $3 million have stirred debate. While the government anticipates the tax amendments to impact a limited number of affluent individuals, Keating suggests that the broader population will be affected over time. With the 12 per cent super guarantee in place, every worker is poised to accumulate retirement savings surpassing the $3 million threshold, reducing reliance on the age pension.

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Keating’s remarks underscore the transformative impact of superannuation on personal and national savings. He emphasizes that universal superannuation has significantly curtailed the budgetary burden of pension payments in Australia, distinguishing the country from its global counterparts. The sustainability and effectiveness of Australia’s retirement system are evident in its low pension expenditure relative to GDP.

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As Australia prepares to embark on the next phase of its superannuation evolution, Keating’s enduring legacy serves as a reminder of the power of long-term planning and foresight in shaping a nation’s financial future. The 12 per cent super guarantee stands as a testament to Keating’s vision of a secure and prosperous retirement for all Australians, marking a significant milestone in the country’s economic history.

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