The SMSF Association has welcomed the federal government’s plan to pay superannuation entitlements on government-funded paid parental leave, with the move expected to help address the retirement savings gap between men and women.
SMSF Association chief executive Peter Burgess noted the plan is designed to reduce the impact of parental leave on retirement incomes, which in turn has contributed to the gender gap in superannuation balances.
“The evidence suggests the more engaged members are, the greater the likelihood of closing the gender superannuation balance gap. Further, policy support is needed to address this issue, but including super payments in paid parental leave is a step in the right direction,” Burgess said.
He added SMSFs were leading the way when it came to closing the gender gap, with a 4.4 per cent decrease in the difference in super balances between men and women in SMSFs between the 2017 and 2022 financial years, compared to a 1.5 per cent increase over the same period in Australian Prudential Regulation Authority-regulated funds.
“Higher levels of member engagement combined with legislative changes, which have enabled catch-up concessional contributions, contribution splitting and encouraged rebalancing strategies to stay within the transfer balance cap, have no doubt been a contributing factor,” he said.
Under the plan, eligible parents with babies born or adopted from 1 July next year will receive an extra 12 per cent of their government-funded paid parental leave as payment to their super fund. According to the Department of Social Services, the initiative will benefit over 180,000 families annually.
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 introduced the measure in a joint announcement last week.