Millennials' share of Australia's superannuation pool has more than doubled over the last decade, according to Roy Morgan.
The latest findings from the researcher's Single Source Survey (Australia) shows gains in superannuation market share were made by all three younger generations since September 2007 with Generation X now comprising 36.2%, Millennials sit at 14.6% and Generation Z up from zero to 1.9%.
This corresponds with the declining market share of Baby Boomers (39.7%) and pre-Boomers (7.5%) as greater numbers enter the decumulation phase.
The research also shows that all but Generation Z are most satisfied with the performance of industry funds, with the younger demographic preferring retail funds. This is associated with their lower average super balances, sitting at $16,600. For comparison, the average balance currently held by Millennials is $59,500 - a significant improvement on $17,300 a decade ago.
"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," Roy Morgan industry communications director Norman Morris said.
"Concerns relating to rule changes to superannuation that are likely to occur over the many years involved and difficulties in accessing funds, are also likely to be contributing to a general lack of engagement by the young in superannuation."
He added that the results are reflective of the compulsory nature of superannuation demonstrating Millennials, Generation Z and Generation X are where the greatest growth potential now lies.
"Baby Boomers and pre-Boomers are becoming less significant for superannuation growth in the long term due to retirement and the associated drawing down of their superannuation balances," he said.
Rainmaker Information head of superannuation research Stephen Fay said the rise in millennial share is almost matched by the drop in pre-Boomer share, with those born prior to 1946 being the first to retire with meaningful balances and begin withdrawing money from the system.
"We are likely to see this continue as baby boomers progressively retire and stop making contributions too. The current millennials are also the first of the groups to have the full SG rate of 9.5% flow through in contributions in their working life. In 1994, when Millennials started working, the SG was only 5% and has increased dramatically thereafter," Fay said.
He also highlighted the propensity for Millennials to be exposed to investment strategies with higher allocation to growth assets on which there has been a long bull run since the GFC.