Anthony Albanese’s apparent pledge to increase superannuation investment in the United States by more than $1.5 trillion the coming decade has raised eyebrows and claims from the opposition that the Prime Minister is using Australian retirement savings as a “bargaining chip”.
However, the figure is simply an estimate of the projected investment pipeline based on current flows, according to the industry peak body which compiled the figures.
On Monday, Mr Albanese and US President Donald Trump unveiled an $US8.5 billion ($13 billion) rare earths deal at the Prime Minister’s long-awaited White House meeting.
At a later event at Australian embassy in Washington, the Prime Minister said Australia’s $4.2 trillion superannuation pool was a significant resource and “we want to use it”.
Adding to the confusion was a White House fact sheet on the deal with the typically Trumpian headline, “President Donald J. Trump Closes Billion-Dollar Deals with Australia”.
“Australia’s superannuation funds will increase investments in the United States to $US1.44 trillion ($2.2 trillion) by 2035 — an increase of almost $US1 trillion ($1.5 trillion) from current levels,” it states.
“This unprecedented investment will create tens of thousands of new, high-paying jobs for Americans.”
It also states that the Export-Import Bank of the United States is “issuing seven Letters of Interest for more than $US2.2 billion ($3.4 billion) in financing, unlocking up to $US5 billion ($7.7 billion) of total investment, to advance critical minerals and supply-chain security projects between our two countries”.
The Trump administration’s announcement caused a stir on social media.
“Err, so Albos deal is to send 36 per cent of Australia’s entire superannuation savings to the US? Seven years of total contributions in the next 10 years?” Freelancer chief executive Matt Barrie wrote on X.
Former Liberal MP Craig Kelly claimed “Albanese got played”.
“So it’s 1000 to 5,” he wrote. “Under this deal, Australia has to invest $1000 billion in the US, and the US only invests $5 billion in Australia return. Has there ever been a more one-sided deal?”
Shadow Treasurer Ted O’Brien also seized on the announcement on Wednesday.
“How is it you have a Prime Minister doing a deal with another country using Australian retirement savings?” he told Sky News.
“My point is this, it’s not a plaything of government. It is not for the government to determine how Australian savings are invested. The responsibility is for the superannuation companies themselves to maximise returns.”
The reality is nearly 20 per cent of Australia’s superannuation is already invested in the US.
US investments are now estimated at $US517 billion ($797 billion) as of June 30, according to analysis of the latest data from the prudential regulator by the Super Members Council (SMC).
That’s significantly higher than IFM Investors’ current estimate of $US400 billion ($616 billion).
Australia’s the total retirement savings pool is forecast to grow to $7.2 trillion in assets by 2035 — taking it from the world’s fourth largest to second — with the mandatory employee contribution rising from 11.5 per cent to 12 per cent in July this year.
The figures cited by the Trump administration are in fact an update on a projection presented by super funds in February at the Australian Superannuation Investment Summit at the Washington embassy, hosted by Ambassador Kevin Rudd and Consul-General Heather Ridout.
According to The Australian Financial Review, the goal of the summit was to highlight to Mr Trump’s Treasury Secretary Scott Bessent how Australia was helping fund American infrastructure and jobs, partly in a bid for tariff relief.
“This is an updated estimate generated by industry,” a spokesman for Treasurer Jim Chalmers said in a statement.
“This showcases the strength of the economic relationship between the United States and Australia.”
The SMC now forecasts US investments in 2035 at $US1.44 trillion, reflecting the higher base in its updated current figure as well as revised allocations to US investments consistent with the latest data, offset by a lower exchange rate.
“The figures represent the latest estimates on the expected US investment pipeline for Australian super funds,” a spokesman for the SMC said in a statement.
“As is always the case, super funds make investment decisions independently, on a case-by-case basis and in the best financial interests of members.”
Mary Delahunty, chief executive of the Association of Superannuation Funds of Australia (ASFA), said superannuation funds “look globally for opportunities to invest these savings and deliver the best risk-adjusted returns for their members”.
“As the world’s largest capital market, the United States is an important investment destination for Australian super funds,” she said in a statement.
“Investment in the US is naturally projected to grow as Australia’s retirement savings pool continues to expand. Industry projections are indicative. Investment decisions are entirely at the discretion of funds and are made solely in the interests of returns to members.”
Wilson Asset Management founder Geoff Wilson told Sky News he didn’t think “it’s up to the government to try to influence” how super should be invested.
But Mr Wilson said his reading of the announcement was “that it’s just expected normal fund flow as super funds look to invest globally and [with] the US market being the largest global market in the world”.
frank.chung@news.com.au
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