One of the submissions to the current Parliamentary Inquiry into boosting the superannuation savings of those under 40 calls for young people to be given access to their superannuation prior to retirement age.

The submission argues that superannuation is an unattractive option for young Australians and that by giving them access to up to half of their voluntary superannuation contributions, super could be made a more attractive saving option.

The twist in the recommendation is that the proponent (Mercer Principal, David Knox) believes that access should be limited to those under 35 – leaving compound interest 25 years to run to age 60 on the remaining half of a person's voluntary contributions.

General Manager of Tasplan, Neil Cassidy believes that whilst superficially attractive, the recommendation would be unlikely to attract extra savings from the young.

“A far better approach would be for the Government to protect the savings of young Australians and the best way to do this would be to lower its Contributions tax.”

“ Probably the most disheartening aspect of superannuation for young people with low account balances is the way that taxation, insurance premiums and administration fees erode their money.”

According to Cassidy, the introduction of some form of national insurance scheme might help to ensure that insurance premiums were kept to a minimum; whilst a reduction in the Contributions tax from say 15% to 10% would provide young people with a big incentive to start saving for their retirement earlier.

“Whilst in recent years the Government has enacted reforms which have made the superannuation system more attractive for those nearing the end of their working lives, it has done little to provide an incentive for the young.”

Cassidy believes that the current House of Representatives Inquiry is very timely as the attitude of the young toward super is yet to crystallise.

“The situation can be described as being balanced on a knife's edge” Cassidy said.” something positive needs to happen to convince the young that super is a good deal.”

“On the one hand our surveys tell us that young members see retirement savings as their own responsibility, however, they are also very mistrustful of Government.”

Cassidy believes the Government must move now to address shortcomings in superannuation as a savings vehicle for young people and build in some compelling benefits to convince them to embrace super even though retirement is a long way into the future.