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The government-funded paid parental leave (PPL) scheme will now include superannuation payments. Considering that women retire with a quarter less in superannuation than men, its a change that has been long overdue.
The new scheme, confirmed in the 2024-25 Federal Budget, has promised women will be paid superannuation on their government-funded parental leave.
The measure aims to reduce one aspect of the gender pay gap, which currently sees women retire with about 25 per cent less super than men. According to ABC News, one-third of Australia’s gender pay gap relates to women taking time out of the workforce to care for family.
While male and female parents are eligible for the Paid Parental Leave scheme, it is currently accessed mostly by women.
“When it comes to those first months of your child’s life, you can’t put a price on being there. And you shouldn’t pay a price for being there,” Treasurer Jim Chalmers said in his budget statement.
The changes to parental leave super were first announced in March 2024. As Finance Minister Katy Gallagher explained in a statement: “The data is clear, when women take time out of the workforce to raise children it impacts their retirement incomes with women retiring, on average, with about 25 per cent less super than men.
“Paying super on government parental leave is an important investment to help close the super gap and to make decisions about balancing care and work easier for women.”
While the change provides women with significantly better financial outcomes, it also sends an important message to society about the value of parental leave.
How Much Superannuation Will Be Paid To People On Parental Leave?
It is estimated a woman on a median wage will receive an additional $4250 to her superannuation.
Under the Albanese Government’s plan, super will be paid at 12 per cent of the Paid Parental Leave rate. As of 2023, the rate is currently based on a national minimum wage of $882.75 per week.
The changes to superannuation payments on PPL also come on top of a previous pledge to increase the number of weeks available to parents.
Currently, parents can access 20 weeks of paid parental leave. This will rise until it reaches 26 weeks in July 2026. The new additional weeks are not designed to be used by just one parent, and are offered to the second parent under a use-it-or-lose-it scheme. When the new super payment changes take effect in 2025, people will be able to access 24 weeks of PPL.
Based on an estimate of around 180,000 families accessing the scheme, the new super payment plan will cost around $1.1 billion over four years, plus $623.1 million each year thereafter.
When Do The Parental Leave Superannuation Changes Take Effect?
Superannuation will be paid on government-funded parental leave for parents of babies born or adopted on or after July 1, 2025.
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