Private accounts with government regulation. It really does work well, here in Australia. America should look at our system.

Corporations can only really "run away with the money" if government doesn't do its job in regulating it all.

It isn't really privatized social security though, is it? It's a system where the government forces the employees and employers to push money into private options in order to, hopefully, create growth of the social security system and pensions. It's a way for the government to fund private organizations through taxes, which is kind of despicable (and happens way to much throughout the world). If it was truly privatized, it would be funded through the people's own, freely given savings. The problem with government run social programs is not that they are run by the government, but that they are not protected from being manipulated in the budget process, and used to cover expenses in other areas.

It isn't voluntary, but it is private. The government forces employers to have an equivalent of a 401 k for the employees, regardless of the size. Consequently, this is taken out similarly to how social security is taken, as a payroll tax. 

Alternatively, Forbes came up with this option: 

"But if we won’t require firms to put away retirement money for employees, why not do the next best thing and make the ones that offer plans automatically enroll staffers unless the workers choose to opt out? Better still, require the plans to feature auto-escalation, so the percentage that employees save goes up each year.

We could get a lot more saving by opting people into retirement plans with the option to default out,” Schrager says."

Put how can it possibly be privatized when it is funded by the government through taxes? I know that line is very blurry a lot of the times but I find it fascinating that we in this day and age call systems where the government basically gives corporations social welfare "privatization". The reasons this system in Australia succeeds (not to sure it has, the article and graphs give way to little information) is because the government has taken the funding of the social security system out of the budget process in a way. It doesn't have to compete with funding of other public areas in the same way as before. The solution would instead to keep it within the government but secure it funding so that defence spending for example, doesn't cut into social security.

Hello, an Australian here (and an Economics major, though they are a dime a dozen these days so don't put too much stock in that ).

Compared to the current US system, Australia's superannuation is miles ahead - truly you're comparing a BMW to a Corolla. Step back though, and there remain some flaws in the Australian system. Further more, there are some tenants of our system that are fundamental to its' functioning effectively, and I fear they would be stripped out if America tried to implement the system.

Firstly, as others have pointed out, our 'Superannuation' exists alongside a social security (we call it pension or welfare) system. This system has some strengths, and some flaws.

Whilst the 9% (now 9.5%) superannuation has greatly increased our national savings, and over the long term left our budget in a much better position, it is actually insufficient. Over the medium term, we're bumping our compulsory employer contribution up to 12% (and some question whether it should be 15%). For most younger people this will mean they have a very healthy nest egg when they retire (assuming that for us, the retirement age will then be higher). As others have pointed out, one flaw is that you can draw down on your super before you can access a pension, resulting in you being a drain on the public purse eventually, after you've overutilised your super.

An issue with the pension specifically, is that its means-testing *excludes* the family home. So, if you have a home worth $1.2 million, but have no other assets and only $50k in cash, you'll be assessed as having $50k, and deserving of a full pension from the State. In the long term, we'll have to bite the bullet and change this. But politically that is very difficult, as there are voters both in those homes, and in the form of their adult children who want to inherit the prime real estate. One proposal has been a 'reverse mortgage,' whereby the state receives some equity in your home in return for a pension - eventually with the option for your children to buy the state out after your death, or to simply receive the remaining share of a sale.

I have seen people in this thread mention 401k's. The primary difference as I understand it is they are not compulsory. To work as intended, Super really has to be an across-the board requirement. Otherwise some people spend big while younger, then draw a pension in their old age. I support favourable tax treatment of super to a point, but in Australia we're starting to see evidence of substantial loopholes that need to be closed.

One key element of the system that I fear wouldn't survive a transition into America is industry super funds. You DO have the freedom to take your super business almost anywhere you want. You can have it managed by a bank, manage it yourself, or use some sort of independent provider. However most industries have not-for-profit industry super funds that don't pay commissions to analysts. Over the last 10-15 years, these funds have actually OUT-PERFORMED the investment decisions of most commercial providers. It has resulted in our savings being MUCH higher than they might have been if more people were with high-fee, under-performing private providers. I am concerned that in America, the finance lobby would be successful at largely cutting out not-for-profit providers (NFP's are literally the default provider for an enormous number of employers).

All-in-all, the sooner America shifted to a system like this, the better placed the nation and its citizens would be, and the less money the Government would lose - with some caveats.

Because the resources aren't shared, as you noted. It's private in the same way the Affordable Care Act's employer and individual mandates are private when compared with single-payer health-care. Really instead of taxing you, they are forcing you to lock away a part of your money. Social security on the other hand is a pooled fund in which everyone's money (raised by payroll tax) is managed by the government, and then the government pays you back what it thinks it owes you. 

You/your employer is paying for the 401 k, not the government  in this scenario. So I guess it really can't be called a payroll tax, but it is for all practical purposes a payroll tax as you can't freely use the money how you wish. It is just a tax that the government never touches (in never actually goes through government treasuries.) 

You have misunderstood. It is not government funded. Employers are required to pay the 9.5% super contribution. When super was introduced, the nation endured a quick, one-off drop in income (as the extra 9.5% was factored out of pay-packets). All of the contributions are paid by private contributions from companies, with optional additions from employees that are favourably taxed. Until recently the government matched a small amount of additional contributions but this has been/is being phased out.

The government mandates that this happens, but it is virtually all private money. And it scarcely falls afoul of civil liberties, as you can manage your superannuation balance yourself if you like.

That is probably the most appealing part of it. Very good to know. 

It all essentially falls under the 'sole purpose' test. That means, the sole purpose of any decision made in relation to your self-managed super needs to be providing a retirement benefit for yourself/any other members of your self-managed fund.

As long as you meet that requirement (i.e. it really is an investment for your retirement, you and other fund members arent trying to make money off it now, or anything else nefarious like that), your fund contributions get taxed at just 15% (our country's highest marginal tax rate on current income is 47%, making super contributions very appealing).

If you can get past the fact that super/401k is compulsory, you actually have a great deal of liberty in how you manage your money - to your own benefit once you're old enough to cash it in.

You just gave the very definition of a tax :). This is usually political semantics in order to cater to cetrain demographics. But just as the US Supreme court concluded regarding the ACA (where emplyers are required to pay into the system), it is a matter of taxation since the purpose is to fund a public system through mandatory payments under the threat of punishment if you do not fulfill you payments. It doesn´t matter if the government are the ones managing the funding in the end, the government are the ones doing the taxation.