Millennials have drastically increased their share of superannuation fund balances over the last decade, more than doubling their share from 6.4 per cent in September 2007 to 14.6 per cent in September 2017.
Super funds held by millennials have increased 382 per cent, or $226 billion, according to Roy Morgan’s latest Single Source Survey, which interviewed over 30,000 super fund members. This is significantly higher than the overall market growth of 110 per cent over the decade.
Gains in super fund shares were seen across all the younger generations. Generation X’s share increased 8.7 per cent in the last decade, the Millennials’ 8.2 per cent, and Generation Z grew from zero to 1.9 per cent. In comparison, the Baby Boomers and Pre-boomers, once the major driver of super fund growth, have dropped their shares by 12.1 per cent and 6.8 per cent respectively.
Industry communications director of Roy Morgan Research, Norman Morris, said that engaging the young people in superannuation has been difficult for funds, despite compulsory superannuation meaning they now represent funds’ greatest potential for growth.
“It is a major challenge for superannuation funds to engage the younger generations in a long-term issue such as superannuation, when they are most likely to have shorter term priorities such as housing affordability and lifestyle,” he said.
Morris said that the general lack of engagement by young people in superannuation is worsened by concerns over rule changes and difficulties in accessing funds.
All generations other than Generation Z expressed greater satisfaction with industry funds over retail funds. Younger generations were found to be generally less approving of both fund types than baby boomers and pre-boomers, however. Roy Morgan said this could be attributed to lower average superannuation balances.
Poor satisfaction with funds from younger generations may also impact funds’ ongoing relationships with younger clients, Morris warned.
“The very low satisfaction levels among the younger generations of around 50 per cent are likely to lead to low brand loyalty and engagement. Industry funds with their higher satisfaction levels should have a growth advantage over retail funds if this lead in satisfaction with performance can be maintained,’ he said.
