On the eve of International Women’s Day the federal government has announced plans to add super contributions to their paid parental leave scheme.
What does this mean? If the legislation passes, parents of babies born or adopted from the 1st July 2025 will receive an additional 12% pay in the form of super contributions. This is on top of the 20-week government funded parental leave.
So what does this look like? Currently the government offers 20 weeks of paid parental leave at the national minimum wage. Right now this is $882.75 per week for a total of $17,655 over 20 weeks. The proposed 12% of super contributions will mean an additional $105.93 being paid into super each week, or a total of $2,118.60 over the maximum 20 weeks.
Why is this so important? An additional $2,118.60 of contributions for a 30 year old taking time off work, could mean an extra $25,000 in their super when they reach age 65. Women, who are taking on the majority of childcare, are retiring with 25% less in their super on average than men. So, this feels like a step in the right direction. But is it enough?
Parental Leave is the only commonly taken form of leave where we don’t have mandated contributions. Outside of the government scheme, 63% of Australian large companies pay parental leave. Of that 63%, 86% pay super. So, if we are really aiming to tackle the superannuation gap, why not make super payments mandatory on ALL paid parental leave, government or otherwise.
Of course, we still need to wait for these changes to be legislated, AND for the planned start date of 1 July 2025. So unfortunately, many will continue to go without valuable super contributions in the meantime.