PRAUSA
Personal Retirement Accounts Internationally
Personal Retirement Accounts work globally—Chile, Australia, Sweden, Singapore—proving funded, individually owned systems deliver real savings, better returns, and genuine retirement security.
Personal Retirement Accounts (PRAs)—funded, individually owned retirement savings vehicles—are not speculative or untested. They exist in numerous forms around the world and demonstrate the viability of funded systems that build real assets rather than promises. Although the United States does not operate national PRAs, several public-sector entities function outside Social Security, offering useful—if imperfect—comparative insights into alternative retirement structures. These global experiences also show that contribution rates vary widely, often because governments layer multiple social-policy objectives onto the retirement system. High foreign contribution levels—such as Singapore’s 30–37%—are not indicative of what would be required for a well-designed, U.S.-style PRA system, which would rely on market returns and ownership, not expansive state-directed savings mandates. The following examples illustrate the possibilities and limitations of PRA-style systems.
International PRA and funded-account systems
Chile – AFP individual accounts (1981–present): Mandatory defined contribution (DC) accounts replaced the old pay-as-you-go (PAYGO) program for formal workers, with contributions managed by regulated Administradoras de Fondos de Pensiones (AFPs). Returns have been strong and the system is solvent, but incomplete coverage (especially informal workers), gender-related balance gaps, and political pressure led to recent shifts toward a more redistributive “mixed” model.
Australia – Superannuation Guarantee (“Super”): Employers must contribute a rising statutory percentage of wages into worker-owned accounts overseen by private superannuation funds. The system is heavily funded, diversified, and globally respected. Criticisms include fees in some funds, complex rules, and adequacy concerns for low earners—problems stemming from government layering of objectives rather than from the DC structure itself.
Sweden – Premium Pension within the Notional Defined Contribution (NDC) system: Of the 18.5% public pension contribution, 2.5% flows into individually owned premium-pension investment accounts with fund choice or a low-fee default (AP7). The DC tier is transparent and diversified, though complexity and behavioral biases affect some savers. The broader NDC structure provides predictability but limits the fully funded portion.
Singapore – Central Provident Fund (CPF): A compulsory savings system with combined employer/employee contributions of roughly 30–37% of wages into individual accounts for retirement, housing, and health. Balances earn government-set interest with optional expanded investment. The system is fully funded and stable, but the exceptionally high contribution rate reflects Singapore’s use of the CPF as a multi-purpose social-policy instrument—not a benchmark for what a U.S. PRA would require.
Hong Kong – Mandatory Provident Fund (MPF): A mandatory defined contribution (DC) system funded by employers and employees, with assets held in individual accounts managed by private trustees. Ownership is clear and vesting is immediate, but the program has long been criticized for high fees and administrative complexity, prompting regulatory reforms toward simpler, lower-cost default funds.
Mexico – AFORE individual accounts (1997–present): New entrants shifted from PAYGO into mandatory DC accounts run by private Administradoras de Fondos para el Retiro (AFOREs). Stable funding and strengthened contribution rates are positives, but historically modest replacement rates and fee concerns triggered reforms aimed at improving adequacy and lowering costs.
U.S. public entities operating outside Social Security
Galveston, Brazoria, and Matagorda Counties, Texas – Alternative Plan (early 1980s opt-out): These counties created individual-account-based retirement programs through private institutions. Long-term comparisons show higher benefits for many full-career average earners than Social Security, but weaker outcomes for very low earners, intermittent workers, and surviving spouses, along with limited inflation protection.
Massachusetts Teachers Retirement System (MTRS) and similar non-Social-Security public systems: Although not PRA-based, these systems operate entirely outside Social Security. Full-career teachers may fare reasonably well, but portability problems, underfunding, and political constraints limit performance—illustrating the vulnerabilities of government-run alternatives.
Alaska public employees – Defined Contribution Retirement Plan: Newer public-sector tiers rely on employer/employee-funded DC accounts with individual ownership. The system is transparent and fiscally predictable but criticized for insufficient guaranteed income, prompting political efforts to reintroduce defined-benefit elements.
PRAs are not perfect, and government involvement often dulls their strengths, but the global record is unambiguous: funded, individually owned retirement accounts work. Their variations and shortcomings simply underscore the opportunity—a properly designed, market-driven, ownership-based PRA system in the United States can avoid those flaws and deliver what PAYGO never could: real savings, real returns, and real retirement security.
Learn More
Want to learn more or get involved?
Click the link below to get added to our newsletter and learn ways to get involved with the move to PRA accounts.
PRAUSA
© Copyright 2025. Personal Retirement Accounts. All Rights Reserved. Content may not be reproduced without permission.
Personal Retirement Accounts Internationally
Personal Retirement Accounts work globally—Chile, Australia, Sweden, Singapore—proving funded, individually owned systems deliver real savings, better returns, and genuine retirement security.
Personal Retirement Accounts (PRAs)—funded, individually owned retirement savings vehicles—are not speculative or untested. They exist in numerous forms around the world and demonstrate the viability of funded systems that build real assets rather than promises. Although the United States does not operate national PRAs, several public-sector entities function outside Social Security, offering useful—if imperfect—comparative insights into alternative retirement structures. These global experiences also show that contribution rates vary widely, often because governments layer multiple social-policy objectives onto the retirement system. High foreign contribution levels—such as Singapore’s 30–37%—are not indicative of what would be required for a well-designed, U.S.-style PRA system, which would rely on market returns and ownership, not expansive state-directed savings mandates. The following examples illustrate the possibilities and limitations of PRA-style systems.
International PRA and funded-account systems
Chile – AFP individual accounts (1981–present): Mandatory defined contribution (DC) accounts replaced the old pay-as-you-go (PAYGO) program for formal workers, with contributions managed by regulated Administradoras de Fondos de Pensiones (AFPs). Returns have been strong and the system is solvent, but incomplete coverage (especially informal workers), gender-related balance gaps, and political pressure led to recent shifts toward a more redistributive “mixed” model.
Australia – Superannuation Guarantee (“Super”): Employers must contribute a rising statutory percentage of wages into worker-owned accounts overseen by private superannuation funds. The system is heavily funded, diversified, and globally respected. Criticisms include fees in some funds, complex rules, and adequacy concerns for low earners—problems stemming from government layering of objectives rather than from the DC structure itself.
Sweden – Premium Pension within the Notional Defined Contribution (NDC) system: Of the 18.5% public pension contribution, 2.5% flows into individually owned premium-pension investment accounts with fund choice or a low-fee default (AP7). The DC tier is transparent and diversified, though complexity and behavioral biases affect some savers. The broader NDC structure provides predictability but limits the fully funded portion.
Singapore – Central Provident Fund (CPF): A compulsory savings system with combined employer/employee contributions of roughly 30–37% of wages into individual accounts for retirement, housing, and health. Balances earn government-set interest with optional expanded investment. The system is fully funded and stable, but the exceptionally high contribution rate reflects Singapore’s use of the CPF as a multi-purpose social-policy instrument—not a benchmark for what a U.S. PRA would require.
Hong Kong – Mandatory Provident Fund (MPF): A mandatory defined contribution (DC) system funded by employers and employees, with assets held in individual accounts managed by private trustees. Ownership is clear and vesting is immediate, but the program has long been criticized for high fees and administrative complexity, prompting regulatory reforms toward simpler, lower-cost default funds.
Mexico – AFORE individual accounts (1997–present): New entrants shifted from PAYGO into mandatory DC accounts run by private Administradoras de Fondos para el Retiro (AFOREs). Stable funding and strengthened contribution rates are positives, but historically modest replacement rates and fee concerns triggered reforms aimed at improving adequacy and lowering costs.
U.S. public entities operating outside Social Security
Galveston, Brazoria, and Matagorda Counties, Texas – Alternative Plan (early 1980s opt-out): These counties created individual-account-based retirement programs through private institutions. Long-term comparisons show higher benefits for many full-career average earners than Social Security, but weaker outcomes for very low earners, intermittent workers, and surviving spouses, along with limited inflation protection.
Massachusetts Teachers Retirement System (MTRS) and similar non-Social-Security public systems: Although not PRA-based, these systems operate entirely outside Social Security. Full-career teachers may fare reasonably well, but portability problems, underfunding, and political constraints limit performance—illustrating the vulnerabilities of government-run alternatives.
Alaska public employees – Defined Contribution Retirement Plan: Newer public-sector tiers rely on employer/employee-funded DC accounts with individual ownership. The system is transparent and fiscally predictable but criticized for insufficient guaranteed income, prompting political efforts to reintroduce defined-benefit elements.
PRAs are not perfect, and government involvement often dulls their strengths, but the global record is unambiguous: funded, individually owned retirement accounts work. Their variations and shortcomings simply underscore the opportunity—a properly designed, market-driven, ownership-based PRA system in the United States can avoid those flaws and deliver what PAYGO never could: real savings, real returns, and real retirement security.
Learn more
Want to learn more or get involved?
Click the link below to get added to our newsletter and learn ways to get involved with the move to PRA accounts.
© Copyright 2025. Personal Retirement Accounts. All Rights Reserved. Content may not be reproduced without permission.