The Australian Institute of Superannuation Trustees (AIST) will pressure the Government to expand the co-contribution initiative.

In particular, the association has called on Labor to make the scheme more attractive to low-income earners and younger people.

AIST research showed that while the majority of people liked the initiative, financial pressures were preventing them from taking up the offer.

"While people have responded well to the co-contribution scheme, housing affordability has simply killed the initiative for people," AIST research and policy manager, Andrew Barr told delegates at the Conference of Major Superannuation Funds yesterday. 

"There is just not enough disposable income for many people to take up co-contribution."

Twenty per cent of 55 to 65-year-old people were more likely to take up co-contribution while only eight per cent of people under the age of 35 participated in the scheme.

"Improving the participation of people is more effective in building the nation's savings," Barr said.

AIST is proposing the intruduction of an automatic government contribution for targeted groups and lifting the upper threshold to make the scheme more widely available.

The association has also welcomed the Government's First Home Saver Account initiative as a way to encourage savings.

"People think there is only a choice between super and a home. They believe you can't have both. We are looking at measures that can do both," Barr said.

The research was based on a survey of 1.3 million active members from three large superannuation funds.