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You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning. You Manage It! 1: Global Australia's 'Super' Retirement Program Is a Source of National Pride Australia currently has one of the most highly regarded re- tirement systems in the world. It is based on compulsory em- ployee contributions that are put into a retirement fund. The retirement system is called Superannuation and it functions similarly to a 401(k) retirement plan in the United States. Cur- rently employers in Australia are required to send 9 percent of an employee's salary into the Superannuation program, which provides a menu of different investment funds that allows em- ployees to make choices regarding how to allocate their re- tirement funds into investments that differ according to risk. Employees' contributions and investment earnings are taxed at 15 percent. substantially below the ordinary income tax rate. Around 20 percent of employees put additional carnings into the retirement fund and some employers match the contribu- tions that employees put in the fund. More than 90 percent of employed Australians contribute to Superannuation, compared to 40 percent of American employees who participate in their employer's retirement plan. The Superannuation retirement program augments a national pension system in Australia that is funded by taxes and is simi- lar to the Social Security retirement program in the United States. At present, the Superannuation program has grown to an amount equal to the cquivalent of $1.5 trillion, which represents over half the amount that Americans have put into their 401(k) accounts, despite the fact that the United States has a population that is 14 times larger than that of Australia. Consequently, experts estimate that an Australian employee who contributes to the Superannuation program over a 30-year period can expect to have a retirement income equivalent to 70 percent of his or her prere- tirement income. This is the percentage of retirement income that financial experts recommend. The Superannuation program began in 1992 and initially it re- quired a compulsory contribution of 3 percent of an employee's salary, Over the years, Australians have voted for increases in the size of the mandatory contributions to Superannuation, so that the employee contribution now currently stands at 9 percent of sal- ary. However, in a recent election Australians approved a gradual year-by-year increase in the contribution anmount, which will end up at 12 percent by 2019 because people in future generations wil1 be likely to require a greater amount of retirement funds to cover longer life expectancies. By comparison, U.S. employees save an average of about 6 percent of their salaries into a 401(k) retirement fund, and consequently many Americans are concerned that they will not have enough retirement income saved when they decide to retire. Due to the success of the Superannuation program, when Australians think about their retirement they have a good reason to smile. 394 PART V • COMPENSATION Critical Thinking Questions 12-9. What can retirement benefits specialists in the United States learn from the successful experience of the Austra- lian Superannuation retirement program? Do you think that American citizens would support a law that requires that 9 percent of employee salaries must be contributed into a 401(k) retirement fund? Explain your reasoning.
Expert Answer:
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Superannuation is money aside by the employer for hisher employees over the working life and will be ... View the full answer
Related Book For
Economics
ISBN: 978-0073375694
18th edition
Authors: Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn
Posted Date:
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In employment interviews, do you think that behavioral questions (such as Tell me about a business problem you have had and how you solved it) are more effective than traditional questions (such as...
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How is a statement of cash flows different from an income statement?
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For the function y = (x + 74/(x + 1) x, calculate the value of y for the following values of x using element-by-element operations: 1.5, 2.5, 3.5, 4.5, 5.5, 6.6.
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If Gold Corp. has an ROE of 15 percent and a payout ratio of 25 percent, what is its sustainable growth rate?
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Nozzles and diffusers are widely used in (a) Heat exchangers (b) Refrigeration systems (c) Rockets and other space vehicles (d) None of these.
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Jetson Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2012s activities, the production...
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How do organizational culture and climate influence employee engagement, job satisfaction, and retention rates, particularly in multinational corporations operating in diverse cultural contexts?
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2. Consulting: A University employs a Professor whose base output is a constant K. The Professor chooses to spend effort e consulting, giving her income pe at personal cost C(e) e/2. Unfortunately,...
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Baraka Ltd is a quoted company that manufactures photocopier machines etc. Baraka Ltd has always maintained a policy of paying dividends to its ordinary shareholders. The dividends paid to ordinary...
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10.2 A single-phase half-wave converter in Figure P10.1 is operated from a 120-V, 60-Hz sup- ply. If the load resistive load is R = 5 2 and the delay angle is a = /3, determine (a) the efficiency,...
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What are the different professional responsibilities of a Civil Engineer? 2. Why do we need to know the obligations and liabilities of both the Civil Engineer and the Client? 3. When do the...
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His synagogue (by check) The Republican Party (by check) The American Red Cross (by credit card) $4,600 400 1,000 His fraternal organization for tickets to a holiday party 100 A baseball autographed...
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What does a Civil Engineer do? Describe an ideal Client-Civil Engineer relationship. You may cite situation/s to further support your answer.? Provide at least 10 qualities of a Civil Engineer at...
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Your company has been asked to provide advice to the Australian Government on a number of proposals it has received from the (fictional) Australian Civil Engineers Union (ACEU)*. The ACEU is...
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You are a financial adviser, and the following information is an extract of data you gathered as part of fact-finding during an initial client consultation for a married couple, Philip (aged 56) and...
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For the data in Exercise 17-19, use the FIFO method to summarize total costs to account for, and assign these costs to units completed and transferred out, and to units in ending work in process....
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How do economists distinguish between the absolute and relative sizes of the public debt? Why is the distinction important? Distinguish between refinancing the debt and retiring the debt. How does an...
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In November 1998 Vincent van Goghs self-portrait sold at auction for $71.5 million. Portray this sale in a demand and supply diagram and comment on the elasticity of supply. Comedian George Carlin...
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Consider the Security Market Line (SML). What determines its vertical intercept? What determines its slope? And what will happen to an assets price if it initially plots onto a point above the SML?
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What would the QA/QC planning grid (see Figure 12. 6) look like for a project you have been involved in? Data from Figure 12. 6 Table 12.6 QA/QC planning grid, with examples Quality assurance...
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Why is the definition of quality critical to the success and acceptance of a project?
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What is the purpose of the Quality Management Plan?
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