BlackRock Inc.’s Larry Fink says the U.S. should look to Australia’s pensions system for solutions after he warned of a looming retirement crisis facing the world’s no. 1 economy.

In his annual letter as chairman of the world’s top asset manager, Fink urged corporate leaders and lawmakers to pursue “an organized, high-level effort” to rethink retirement and held up Australian pensions—known as superannuation—as a “good model for American policymakers to study and build on.” 

Fink said the compulsory nature of Australia’s system, in which employers contribute to workers’ retirement accounts, had made the country’s people wealthier since its 1992 introduction and prevented a potential crisis.

“Thirty-two years later, Australians likely have more retirement savings per capita than any other country,” Fink wrote. “The nation has the world’s 54th largest population, but the fourth largest retirement system.” 

Fink said about 20 U.S. states including Colorado and Virginia had similar systems, but more should be considering them. Nations like Australia were also making it simpler for part-time and contract workers as well as relieving “financial tension” in their country’s public pension program. 

“It’s a good thing that legislators are proposing different bills and states are becoming ‘laboratories of retirement.’ More should consider it,” he wrote. “The benefits could be enormous for individual retirees.” 

Australia’s pensions system is the fourth largest in the world, with its rapid growth being fueled by the compulsory contributions of 11% of workers’ wages, rising to 12% in 2025. A report from Mercer predicts industry assets topping A$13.6 trillion by 2048 with a dozen ‘mega-funds’ controlling more than A$100 billion each by 2028.

Still, Australian pension funds face their own challenges as a wave of retirement approaches in the coming years. Funds have been warned by the regulator they must do more to help workers transition to retirement, while being confident they can draw down their balances without running out of money. 

Fink, meanwhile, said even those in the U.S. with enough retirement savings didn’t necessarily know how to spend it. A 2018 BlackRock survey showed that the average American retiree still had 80% of their pre-retirement money saved two decades into retirement.

“Savers first must build up a nest-egg, then spend down at a rate that will last them the rest of their lives,” he wrote. “But who really knows how long that will be?”

This article was provided by Bloomberg News.