The superannuation industry has welcomed the introduction of the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Bill 2024, which is hoped to address the “next big milestone” on the road to retirement gender equity.
The bill will mandate superannuation contributions on government paid parental leave (PPL) from 1 July 2025 and will build on the government’s work to increase the payment to a full six months by 2026.
The reform was announced in March this year and was described by the Minister for Women senator Katy Gallagher as an “important investment” to help close the super gap.
HESTA CEO Debby Blakey said the introduction of the bill “brings us one step closer to addressing a longstanding gender-blind spot in our retirement system”.
“More than 80 per cent of our 1 million-plus members are women, with many working in typically lower-paid industries such as aged care or early childhood education,” she said.
“Paying super on paid parental leave will help our members add to their retirement accounts, narrowing the gender super gap and making Australia’s super system fairer.”
ASFA CEO Mary Delahunty said the legislation goes beyond a victory for fairness.
“It’s an acknowledgement of the sacrifices so many women make for their families,” she said.
“For too long, women have carried the burden of reduced superannuation simply because they took time out to care for others. These caring roles contribute meaningfully to the economy but come at a cost of dignity in retirement, mainly for women.
“As we observe Equal Pay Day this week, this legislation sends a powerful message: caregiving is valued, and financial security in retirement is a right.”
Research from the Super Members Council (SMC) suggests paying super on PPL could reduce the gender gap at retirement by around a quarter.
It estimates over 90 per cent of the benefits accrue to women, with some 170,000 women having received Commonwealth Parental Leave Pay in 2022–23.
Once legislated, the reform could narrow the gender super gap, it said, which presently stands at around $50,000 for those nearing retirement.
“This historic reform will make a vast difference to the lives and retirement incomes of generations of Australian women,” said SMC CEO Misha Schubert.
“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.
“It’s the next big milestone on the road to retirement gender equity – and we urge the Parliament to pass the Bill swiftly. Australia must continue to make major advances like this to ensure all women can have a financially secure retirement.”
Blake Briggs, CEO of the Financial Services Council, echoed the sentiment, saying the scheme would increase the wellbeing and financial security of Australian parents, especially women.
“This will make a significant difference for primary carers who may not otherwise receive superannuation contributions when they take leave from the workforce to raise a family,” Briggs said.
“It plays a role in bridging the retirement savings gender gap and improving gender equality in Australia.”
Vicki Doyle, CEO of Rest, also said that it had been an “unfair anomaly” that the PPL scheme was the only common form of leave without compulsory super contributions.
“This has led to many female Rest members retiring with less super than our male members. In fact, the gender super gap for our members approaching retirement is 27 per cent – a figure that has widened in recent years,” Doyle said.
“We represent 2 million members, of whom more than 1 million are women. This reform needs to pass as soon as possible so that, from next July, our members on parental leave can start benefiting from the compounding returns on their new entitlements.”
Aware Super CEO and WGEA pay equity ambassador Deanne Stewart similarly said that closing the ever-present retirement gap is a matter of urgency for Aware Super’s 1.1 million members, two-thirds of whom are female.
“We congratulate the Labor government on the introduction of this long-awaited legislation, which will provide certainty for those using the government parental leave scheme that their retirement savings will not pause while they are undertaking crucial caring duties,” said Stewart.
“This is a vital step towards closing the gender retirement gap and I encourage the government to continue its focus on ensuring both paid and unpaid care work are appropriately valued.”
