The superannuation saver scheme, which was announced as part of Australia’s 2017 federal budget, represents a great opportunity for super funds to reach out to young Australians, who are otherwise disengaged with the super.
Designed to address housing affordability, the scheme will allow first-home buyers to save for a deposit by salary-sacrificing into their super fund from July 1, 2017. On top of existing compulsory super contributions, individuals saving to buy will be able to put a total of A$30,000 into their super (up to A$15,000 per year).
Of course, the primary role of the super is, and should be, to help individuals save for retirement. Yet many young Australians are unengaged and uninterested in retirement planning, with other milestones – such as saving for a house deposit – more imminent. Compulsory super contributions are therefore entirely at odds with their immediate financial goals.
However, reaching out to young Australians should be a priority for Australian superannuation funds. The proportion of people who have switched super fund remains stubbornly low, and many don’t consolidate their funds after changing job. It is therefore all the more important to engage with young Australians and foster loyalty early on.
According to our data, more than one third of those aged between 18 and 34 are saving for a house deposit. They represent an ideal target market for the new savings scheme, as well as long-term super funds. In Australia’s over-priced property market, getting a foot through the property door is a major concern for Generation Y; a scheme that can help this segment accelerate their savings will allow super funds to position themselves in a fresher, more relevant, way. Super funds need to jump on this opportunity, with a potential long-term benefit in member numbers.