Provision of superannuation on Paid Parental Leave

The long-term financial security of parents, particularly mothers, in their retirement years, is threatened by the Coalition’s proposed changes to the Paid Parental Leave Bill, says The Parenthood. 

The long-term financial security of parents, particularly mothers, in their retirement years, is threatened by the Coalition’s proposed changes to the Paid Parental Leave Bill, says The Parenthood. 

Earlier this year, Labor pledged to include 12 per cent superannuation on publicly funded paid parental leave from July 2025 to close the retirement savings gap between men and women. 

Under the Coalition’s proposal, parents would be able to choose to receive a superannuation payment, take extra weeks off work, or receive a $2,900 lump sum payment at the time of their child’s birth.  

CEO of The Parenthood, Georgie Dent said that the advocacy organisation supports extending paid parental leave beyond the 26 weeks already announced, but not at the cost of superannuation. 

“The inclusion of super on paid parental leave is specifically designed to boost the retirement savings for parents – mums in particular,” said Ms Dent.

“Aside from being inflationary, a lump sum payment would not include compounded interest, leaving many parents who choose to take it thousands of dollars worse off in the long-term.

“Paying superannuation on paid parental leave could mean as much as $30,000 extra in retirement savings per family, per child. A $2,900 one-off payment will not compensate for this.

“Further, it risks functioning as a band-aid solution to the financial insecurity that many young families find themselves up against due to the high cost of living.”

The OECD released a report today - a day following the Coalition’s proposal - which found that Australian parents face a longer-than-average ‘childcare gap’. 

There is an average of four years between the end of paid parental leave and the start of publicly funded early education in Australia, compared to countries such as the UK, where there are only two, and New Zealand, where there are only three.

“This has long-term impacts on parents’ financial wellbeing. In the five years after women have children, their earning potential drops by 55 per cent and often never fully recovers. Investing in superannuation and the retirement years has never been more important.

“Labor’s reforms to paid parental leave – both its expansion to 26 weeks and the inclusion of superannuation on parental leave payments – aims to systematically redress the financial disadvantage mothers experience. The Coalition’s proposal would undermine this,” said Ms Dent.