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The recent passage of the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Bill 2024 marks a significant milestone for Australian families. This landmark legislation ensures that superannuation contributions are now included in the government-funded Paid Parental Leave scheme, providing a more secure retirement for parents taking time off to care for their children.
What is the Paid Parental Leave scheme?
The Paid Parental Leave scheme is a government initiative designed to provide financial support to eligible parents, allowing them to take time off work to care for a newborn or recently adopted child. It has been in place since 2011.
Under the current scheme, parents can receive up to 22 weeks of Parental Leave Pay at the rate of the national minimum wage, increasing to 26 weeks by 2026. The scheme is flexible, allowing parents to share the leave between them. Although the scheme is subject to an income test, it is paid in addition to any employer-funded parental leave payments.
Key benefits of the amendment
Starting from 1 July 2025, eligible parents will receive an additional payment based on the Superannuation Guarantee (12% of their Paid Parental Leave payment) as a contribution to their nominated super fund. This move is expected to improve the economic security in retirement for around 180,000 Australian families each year1.
Addressing the gender gap in retirement savings
One of the primary goals of this amendment is to address the gender gap in retirement savings. Currently, women retire with about 25% less super than men—an estimated $51,700 less on average2. By including super in Paid Parental Leave, the government aims to reduce this disparity and enhance the financial security of women in their retirement years.
You can read more about how to grow and manage your super at our Superannuation insights hub. For more information on the Paid Parental Leave scheme, visit Services Australia.
1 Paying superannuation on Paid Parental Leave | Prime Minister of Australia (pm.gov.au)
2 Super boost for new parents | Ministers' media centre (pmc.gov.au)
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