A recent announcement by the Australian Government revealed that from 1 July 2025, people who receive government-funded Paid Parental Leave (PPL) will also be paid superannuation on top of their payments. In addition to this change, the Paid Parental Leave scheme will also be expanded to 26 weeks by 2026.*
Why is this important? To some, this change may not seem like much. It’s only 20 weeks, which is small compared to the amount of time an average person spends working. But the longer a person has money going into their super, the better they will be in funding their retirement. Because even when money isn’t going into super, balances can erode through fees, insurance premiums, and potential negative investment returns.
Women have been shown in countless statistics to have lower super balances than men and overall retire with less than men. This is largely due to women being the ones taking time out of the workforce to raise children, care for relatives, and then spend time in part-time roles. This can mean they are more reliant on their spouse’s super in retirement, and if these relationships break down, they can be left financially struggling in later years. And although there are many households where women may not be the ones taking time off work, that was the norm for a very long time.
Additionally, Australia’s ageing population is increasing. When Australia introduced the pension in its first form in the early 1900s, only around 4% of Australians were over 65. The life expectancy was also much lower than it is now. Today, 16.4% of the current population are aged over 65, and in four decades this is expected to reach over 20%.** One of the intentions of super is to decrease a reliance on the Age Pension, which wasn’t designed with such a large ageing population in mind.
There have been recent changes to PPL that means now both parents can take a share of the current leave amount of 20 weeks. By adding superannuation payments to paid leave, families will be able to have more flexibility about how to divvy up care responsibilities, knowing that neither of their super will be affected by time out of the workforce.
Note: Proposed legislation to expand the amount of PPL is currently before the Senate. If passed, PPL will increase by two weeks on 1 July 2024, 2025 and 2026.
*Department of the Prime Minister and Cabinet, ‘Paying super on Government Paid Parental Leave to enhance economic security and gender equality’
**AIHW, ‘Older Australians’
