Student Super has launched the first super fund that is specifically designed to meet the needs of young Australians. The launch follows new research conducted by Student Super’s sister company, Student Services Australia, which surveyed 3,566 students nationally in October 2018.
The survey revealed a startling knowledge gap when it comes to super, with 49.72 percent of students having little or no knowledge about superannuation, and 42.41 percent unsure about how much money they had in their super fund. This is despite 65.55 percent of students saying they had a super fund.
With students often having multiple casual and part-time jobs before they enter the full-time workforce – each often having a different super account – it’s all too common for the lion’s share of their super contributions to be unwittingly eaten up by fees.
What does this mean for the super fund industry?
Andrew Maloney, CEO of Student Super, said the lack of awareness that young Australians had about their super funds was a major issue.
“Students can have as many as six different employers before they turn 25. But because they’re usually not thinking about their long-term financial goals, they’ll go with whatever the default super fund is each time. In fact, 69.61 percent of students surveyed said they used the default super fund that their employer set up for them.
“What they don’t realise is that they’re paying duplicate fees with each fund, which can eventually whittle their super down to nothing. That’s a whole decade’s worth of contributions that could make a real difference to their super balance down the line.”
For example, if a student had four casual jobs while studying and went with a different super fund each time, they could pay as much as $1,200 in fees – eating up most, if not all, of their super balance. This amount, although small could grow to $26,426 by age 65.
Other findings from the survey include:
49.25 percent of students don’t know what percentage of their income is paid into superannuation. A further 30.15 percent got the number wrong.
More than half of all students (59.97 percent) weren’t sure about whether they could open a superannuation fund before they got a job
41.41 percent were unsure of how much money they had in their super fund
53.06 percent didn’t know whether their superannuation fund provided them with life insurance
Student Super is designed for students who have casual or part-time jobs while they’re studying. As the first super fund that recognises the unique needs of students, it charges zero fees for balances under $1,000, and has significantly discounted fees for balances under $5,000.
Additionally, Student Super doesn’t offer TPD (disability cover) or life cover, which helps to keep the fees low and removes the possibility of a student’s super balance getting gobbled up by fees.
“Regular super funds aren’t setup to accommodate the frequent job-hopping and sporadic income of the typical young Australian, whereas Student Super is.”
“We’ve set this fund up to empower students to get the best possible start on their financial future. Joining takes less than five minutes, and using the fully-featured, jargon-free Student Super app, young adults can find and combine any existing funds, let their employer know where to pay their super, and even change how their super is invested,” added Mr Maloney.