The government will pay superannuation on paid parental leave (PPL) entitlements from 1 July 2025 as part of a wider plan to expand the scheme, but has yet to release details about the cost of the move.
The announcement to pay superannuation on PPL was made by Treasurer Jim Chalmers, Minister for Finance, Minister for Women and Minister for the Public Service Senator Katy Gallagher and Minister for Social Services Amanda Rishworth.
“Taking time out of paid work to care for children is a normal part of working life for both parents,” the joint announcement said.
“Paying super on government PPL will help normalise parental leave as a workplace entitlement, like annual and sick leave, and reduce the impact of parental leave on retirement incomes.”
While plans to expand the PPL scheme out to 26 weeks by July 2026 were before the Senate, details about how superannuation would be paid on PPL, as well as its cost, will be released in the May budget.
Gallagher said it was clear the time women take out of the workforce to raise children impacts their retirement incomes and they retire with about 25 per cent less superannuation than men.
Rishworth added: “[Superannuation on PPL] helps normalise taking time off work for caring responsibilities and reinforces paid parental leave is not a welfare payment – it is a workplace entitlement just like annual and sick leave.”
The move has been welcomed by the Association of Superannuation Funds of Australia (ASFA), Financial Services Council (FSC) and Super Members Council (SMC).
ASFA chief executive Mary Delahunty said it was a “welcome and long-awaited measure” that would deliver a boost to equity in the superannuation system.
“A new generation of women who receive the full benefit of the superannuation guarantee payment on their government paid parental leave stand to add thousands to their retirement balances,” Delahuty said.
“This is a welcome move that goes some way to combat the retirement savings gap and to signal that women’s contributions to work and to caring actually matter.”
SMC chief executive Misha Schubert said super payments on the PPL would benefit about 180,000 Australian mothers each year and “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”.
FSC chief executive Blake Briggs congratulated the government, adding the PPL change would increase the financial security and well-being of Australian women.
