New Parents to Benefit from 12 Percent Superannuation Contribution on Paid Parental Leave
Mothers typically end their careers with 25% less superannuation, experiencing a 55% drop in earnings during the first five years of parenthood, known as the ‘motherhood penalty.’
A new bill has been introduced in Australia to enable new parents to earn superannuation in addition to government-funded paid parental leave starting from July 2025. The goal is to reduce the gap in retirement savings between genders.
Under the new bill proposed by Social Services Minister Amanda Rishworth on August 22, new parents can receive 12% superannuation while on paid parental leave, a significant change from the previous lack of superannuation during this period.
If approved, approximately 180,000 families per year stand to benefit from the scheme.
“Through this bill, we are investing $1.1 billion to provide superannuation on government-paid parental leave starting in July 2025,” stated Rishworth.
Prime Minister Anthony Albanese hailed the initiative as a “modern policy for modern families” that offers choice, security, and rewards ambition.
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“My government is enhancing Paid Parental Leave by extending it to six months. This bill reinforces that by adding superannuation on top of it,” he explained.
Rishworth highlighted that women, who are often the primary caregivers in Australia, tend to retire with 25% less superannuation compared to men due to the “motherhood penalty.”
“Women experience an average 55% decrease in earnings during the first five years of parenthood. This income disparity accumulates over time, widening the gap between men and women’s retirement savings,” she stated.
She emphasized in Parliament that “inequality benefits no one,” underscoring that providing superannuation on paid parental leave is a crucial step in bridging gender disparities in retirement savings.
The government explained that the law builds upon recent reforms, including the extension of the Paid Parental Leave scheme to 26 weeks by 2026.
“Since July 1, 2024, parents can avail of 22 weeks of Paid Parental Leave, up from 20 weeks, providing more assistance as parents take time off work to care for their newborns,” the statement read.
It further detailed that a one-time superannuation payment, with an interest component, would be paid at the end of each financial year to those who received Paid Parental Leave. This contribution will be automatically deposited into the eligible parents’ superannuation accounts.
Rishworth reiterated the Labor government’s dedication to gender equality and enhancing working conditions.
“One of the most effective ways to boost productivity and workforce participation is by offering more options, increased family support, and greater opportunities for women,” she remarked.
While some employers already provide superannuation on top of paid parental leave, the new legislation ensures that parents utilizing government-funded leave can avail of the same benefit.
“We recognize the importance of paid parental leave for the well-being of families, parents, and children. It not only benefits families but also contributes to our economy,” she added.
