SYDNEY — Australian Prime Minister Julia Gillard Wednesday ruled out creating a sovereign wealth fund, saying the nation's mandatory pension savings were an "anchor" in volatile economic times.
Some business figures have called for the establishment of a sovereign fund to capture the earnings of a mining boom fuelled by demand from Asia.
"Some say that in the current economic environment we should be considering establishing a sovereign wealth fund," Gillard said in an address to the Financial Services Council in Sydney.
"I take a different approach.
"I believe that superannuation is already our trillion-dollar sovereign wealth fund -- but with market benefits.
"That's because it's privately managed by thousands of trustees instead of a sovereign wealth fund managed centrally by a Canberra-appointed manager."
Australia introduced a superannuation guarantee 20 years ago, under which employers must contribute towards a worker's pension fund at a rate equivalent to nine percent of the employee's salary.
As a result, Australia now has the fourth-biggest pool of pension assets in the world worth some Aus$1.4 trillion (US$1.5 trillion), Gillard said.
"In rocky international seas, super is an anchor," Gillard said, adding that the government intends to increase universal super contributions from nine to 12 percent by mid-2019.
"For a nation with a long-standing propensity to spend more than we earn, a super pool bigger than our gross domestic product helps offset our current account imbalance, and fosters liquidity and stability."
Source: AFP
Some business figures have called for the establishment of a sovereign fund to capture the earnings of a mining boom fuelled by demand from Asia.
"Some say that in the current economic environment we should be considering establishing a sovereign wealth fund," Gillard said in an address to the Financial Services Council in Sydney.
"I take a different approach.
"I believe that superannuation is already our trillion-dollar sovereign wealth fund -- but with market benefits.
"That's because it's privately managed by thousands of trustees instead of a sovereign wealth fund managed centrally by a Canberra-appointed manager."
Australia introduced a superannuation guarantee 20 years ago, under which employers must contribute towards a worker's pension fund at a rate equivalent to nine percent of the employee's salary.
As a result, Australia now has the fourth-biggest pool of pension assets in the world worth some Aus$1.4 trillion (US$1.5 trillion), Gillard said.
"In rocky international seas, super is an anchor," Gillard said, adding that the government intends to increase universal super contributions from nine to 12 percent by mid-2019.
"For a nation with a long-standing propensity to spend more than we earn, a super pool bigger than our gross domestic product helps offset our current account imbalance, and fosters liquidity and stability."
Source: AFP
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