Young people are building up superannuation balances earlier, with new research from Queensland based fund QSuper showing the number of 18-year-old members grew 24 per cent over the four years to October 2017.
Average super balances for 18-year-olds in the fund were $1200, QSuper found.
Overall Australian Prudential and Regulation Authority figures for June 2016, the latest available, show that people under 25 held 11 per cent of Australia’s superannuation accounts.
For industry funds they made up 17 per cent of all accounts, compared to 14 per cent of corporate funds, seven per cent of retail funds and four per cent of public sector funds.
Those differences are likely to be a result of the fact that most young people work in entry-level jobs and, as a result, become members of default funds attached to industrial awards. In this sector industry funds dominate the numbers.
Overall, under 25s have fund balance averages of $5588, with males holding an average of $6595 and females $4598. But overall under-25s accounted for only 1 per cent of superannuation balances, which is to be expected as they have had little time to make contributions.
QSuper’s member experience chief, Jason Murray, said super was becoming more relevant for young people, meaning education on the importance of super prior to entering the full time workforce was increasing.
“For an 18-year-old, $1200 is a significant-sized balance, so it’s important for them to make sure they understand what super is, how it works and how they can easily grow their balance over the long term with not a lot of effort on their part,” he said.
A recent survey of QSuper members showed that when it came to information about their finances, 86 per cent of respondents aged 18-24 had sought the opinion of family and friends within the past year – their number one source for information.
“Given the importance of family and friends as a source of information, we encourage parents who have teens and young adults to teach them the Super 6Rs, a checklist on the QSuper web site, to provide quick and easy lessons in superannuation,” Mr Murray said.
“Whether a senior at school, starting University or entering the workforce, this checklist will help new members of the workforce understand what they are entitled to, what they should look for in a fund and simple strategies they can follow to ensure they get the most from their fund and their retirement.”
Along with school and family input, young people could gain valuable information through online resources like ASIC’s MoneySmart2, Mr Murray said. “Young Australians are better equipped than ever to be smart about their super, but we know their most influential source of financial information is closer to home,” he said.