Government announces ‘historic reform’ of super on PPL
The Albanese government has confirmed superannuation will be paid on the Commonwealth paid parental leave (PPL) scheme from next year, addressing a longstanding “gender blind spot” in the retirement system.
The “historic reform”, the government described, will come into effect from 1 July 2025 and will build on the government’s work to increase the payment to a full six months by 2026.
Announcing the decision, Minister for Women, senator Katy Gallagher, highlighted existing data that women retire with about 25 per cent less super than men on average, having taken time out of the workforce to raise children.
“Paying super on government parental leave is an important investment to help close the super gap and make decisions about balancing care and work easier for women,” Senator Gallagher said.
Treasurer Jim Chalmers added that a stronger paid parental leave system “is good for families and good for the economy as well”.
“Paying super on paid parental leave is part of our efforts to ensure women earn more, keep more of what they earn, and retire with more as well,” he stated.
“In the long term, this important change means a more dignified and secure retirement for more Australian women. We’ve made clear for some time that this is a priority and now we make it a reality.”
Mary Delahunty, chief executive of the Association of Superannuation Funds of Australia (ASFA), described the move as a “milestone” that would “deliver a huge boost to equity in the superannuation system”.
ASFA research previously highlighted the median superannuation balance in June 2021 for those aged 60 to 64 was around $212,000 for males, compared with just $159,000 for females.
Moreover, a 2022 consumer survey of over 1,000 people found more than 80 per cent of Australians agreed the government should boost the super of women who take time out of the workforce to have children. In contrast, just 8 per cent disagreed and 11 per cent held a neutral stance.
“For too long, women have retired with significantly fewer savings on average than men as a result of taking time off work, or working reduced hours to have and raise children,” Delahunty said.
“It’s about bloody time.”
She also observed the announcement came ahead of International Women’s Day, which she found “fitting” with the theme of 2024 to “invest in women”.
Super Members Council (SMC) chief executive, Misha Schubert, saw the “watershed reform” as a clear intent from the government to further improve the quality of life for all women at retirement.
In its 2024–25 pre-budget submission, it highlighted the analysis that a mother of two who received super on the scheme would be $14,500 better off in retirement and a mother of one child would be $7,500 better off.
“It will powerfully propel Australia closer towards the goal of ending the financial ‘motherhood penalty’ in the early years of having children – which has a compounding effect across women’s working lives,” Schubert elaborated.
“It’s the next big step on the road to retirement gender equity – and Australia must continue to take bold actions like this to ensure all women can have a financially secure retirement.”
Parental leave is one of the only types of paid leave that does not attract super and the announcement “sets an example for more employers to follow”, the industry body added.
SMC estimated about 180,000 women received Commonwealth PPL in 2022–23.
A number of superannuation funds, including HESTA and Rest, which previously highlighted the measure in their government engagement, have also welcomed the announcement.
“It’s fantastic to welcome today’s federal government announcement that super will be paid on the Commonwealth parental leave pay scheme, addressing a longstanding gender blind spot in our retirement system,” said Debby Blakey, HESTA chief executive.
Rest chief executive, Vicki Doyle, described paying super on PPL as a “much-needed improvement”, noting that more than 1 million of the fund’s members are women, and the gender super gap for Rest members nearing retirement stands at 27 per cent.
“We know every super dollar counts for these members, who often work in low income, part-time or casual jobs. This change will undoubtedly help enable a more equitable retirement future and go some way to address the gender super gap,” she said.
AUTHOR
Rhea Nath
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So another impost on small businesses! How does the owner of the business make a profit if he/she needs to be a form of social security for their employees? Oh that's right, save the government looking after taxpayers.
This looks like just another way to get blood out of a stone. If they really want to help with the trendy "cost of living" crisis" how about it stops taxing the same item multiple times? For example, petrol has Fuel Excise Tax and GST in the price per litre, which motorists pay for from after-tax income (ie wages in most cases)! The same multi-tiered tax grab applies to things such as alcohol and tobacco. I'm sure there are plenty of other examples but I think people will get the idea. Too bad the government doesn't.
I look after many small business clients and can see them downsizing their workforce ot just shutting up shop. Can't say I blame them as the government doesn't seem to realise or care that if you keep hacking away at their cash flow then they can't afford to keep operating. But judging by the fact that some of the top beaurocrats in Canberra are getting close to $1 million per year in wages (and no doubt other perks), what do they care about anyone else trying to make an honest living? The real bludgers are running the asylum!