Super now paid for parental leave

Working parents will now be paid super when they take leave to care for their babies – a reform that will boost a mother-of-two’s retirement savings by about $14,800 and help to fix gender inequity.

Until now, parental leave was the only type of paid leave that didn’t attract super — whether funded by employers or the government.

That changed on July 1, with superannuation now paid on Commonwealth Parental Leave Pay — a long-overdue reform that will meaningfully reduce the gender super gap.

Paying super on the Commonwealth parental leave scheme will benefit around 200,000 Australian mothers each year. Around 95 per cent of Commonwealth Parental Leave Pay will flow to women.

It will narrow the gender super gap by around a quarter, which is currently about $50,000 for Australians nearing retirement.

Despite Australian women – on average – living longer than men and retiring sooner, women have about a quarter less super than men as they approach retirement.

New Super Members Council analysis shows the gender super gap dramatically widens when women reach their 30s – this is the decade many women take time out of the paid workforce to raise children.

At a state level, West Australia has the widest gender super gap of all states at 33 per cent, while ACT has the lowest at six per cent.

Super Members Council chief executive Misha Schubert said the start of paying super on paid parental leave was an historic achievement that would deliver compound investment returns throughout parents’ lives.

“We’re not talking baby steps here – this is a huge stride forward to tackle women’s retirement inequity,” she said.

“This reform will make millions of women thousands of dollars better off in retirement, helping to narrow the gender super gap,” she said. “It’s going to be transformative to help to tackle gender inequity in retirement.”

Having secured super on paid parental leave, the council’s advocacy will now turn to another key lever to narrow to the gender super gap – championing a boost to the Low-Income Super Tax Offset (LISTO).