Young investors snub superannuation: another age pension disaster looms?

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A wealth adviser has spoken of the significant problems the country faces as a result of the younger generation choosing to snub superannuation, instead putting their money elsewhere.

Cassandra Macolino from William Buck told Wealth Professional of her significant concerns due to a growing trend of younger investors who no longer trust the superannuation system.

More than ten years of debate about the regulations has forced many to park their money elsewhere, she said.

“All younger people are reading is that they’re changing this and that, so they’re thinking ‘for the rest of my life super will change, so why should I invest in it?’” she said.

Macolino wants the government to address this issue urgently because even though generation Y are putting money aside outside of super, it is nowhere near enough to retire comfortably.

We’re heading to yet another age pension disaster, she said.

“Most young people would be shocked at how much they actually need to save to be comfortable in retirement – we say about 15%. We’re forcing our young people to save outside of super and they’ll be a burden on the age pension system in the future.”

Macolino, herself of generation Y, wants to see the government slow down the rate of change and provide a more stable outlook for future retirement savings.

There also need to be greater incentives for young people to buy into the superannuation system - especially for lower income earners - and better education.

“There needs to be more education, especially around superannuation investing. We’re constantly hearing that ‘super loses money’,” she said. “They’ve seen in the media that super has dropped by some amount, but it’s the investments [that have dropped] not the superannuation itself, which would have happened outside of super too. Super is a taxation vehicle, and not an investment vehicle.”

To change the worrying trend a long-term commitment is needed from the government to provide people with certainty that having money in super is always going to be more attractive tax wise than having money out of super, Macolino said.

“Whether that’s possible when such a large asset pool sits at the mercy of the government’s changing agenda remains to be seen.”

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