Bill to pay super on parental leave passes Parliament

Mandated payments of superannuation on paid parental leave will boost the retirement incomes of hundreds of thousands of Australians, super funds and unions say.

The bill to provide superannuation on paid parental leave, the Adding Superannuation for a More Secure Retirement Bill 2024, was passed by the Senate yesterday (Thursday, 19 September) and will commence next July.

The NSW and ACT branch of the Independent Education Union (IEU) of Australia said the legislation was “another step towards addressing the gender imbalance in retirement incomes”, with women, on average, retiring with 25 per cent less superannuation than men.

This legislation means superannuation will be paid on Commonwealth Paid Parental Leave payments from 1 July 2025. The number of weeks of paid leave will also increase from 22 to 24 weeks on the same date. On 1 July 2026, the scheme will increase to 26 weeks of paid leave.

“The union movement has long campaigned for these changes, and we congratulate the Labor government for taking this practical step to address the inequitable gender gap in super,” said IEU of Australia NSW/ACT branch secretary Carol Matthews.

The Australian Council of Trade Unions (ACTU) has similarly welcomed the legislation, noting that time taken out of the workforce to care for children disproportionately impacts women.

Women with children face an average 55 per cent drop in earnings in their first five years of parenthood, according to the ACTU.

The absence of superannuation payments, and their compounding returns, during periods of parental leave costs Australians tens of thousands of dollars in retirement savings, it said.

The ACTU said this reform will particularly benefit lower-income families who are more likely to be recipients of Commonwealth Paid Parental Leave.

ACTU president Michele O’Neil said having a baby shouldn’t cost parents a secure and dignified retirement.

“For too many parents, women particularly, taking time off work to care for children not only impacts their earnings but also their superannuation savings,” said O’Neil.

“It’s grossly unfair that women retire with an average of 25 per cent less super than men. The Albanese government’s reform will go a long way in closing the inequitable gender superannuation gap. No parent should be penalised for taking time out of the workforce to take care of their newborn child.

“Paying super on Commonwealth Paid Parental Leave is a win for parents, a win for gender equality and a win for the economy.”

Super fund Hesta said the legislation was a significant step forward, with women often retiring with significantly less superannuation than men and taking on most of the paid primary carers’ leave.

“For a typical HESTA member taking 18 weeks of paid parental leave on the government scheme, HESTA modelling shows the inclusion of super will add around $6,500 per child at retirement,” said Hesta chief executive Debby Blakey.

“With nearly 80 per cent of HESTA members being women, many of whom work in lower-paid sectors like aged care and early childhood education, this reform can help them achieve a more secure retirement.”