Superannuation Boost for Paid Parental Leave

A Step Toward Gender Equity in Retirement Savings

The Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Act 2024 marks a pivotal step in addressing the gender gap in retirement savings.

Employers please note:

• The new Act takes effect from 1 July 2025
• Provides eligible parents with an additional 12% of their Paid Parental Leave as a super contribution
• This contribution will be in line with the SG rate and will increase over time with any future adjustments to the legislated rate.

Introduced as part of the Government’s broader reforms, this Act extends superannuation contributions to Paid Parental Leave, providing financial support for families and working parents, particularly women.

For decades, women — who make up the majority of primary caregivers — have faced financial setbacks after becoming parents. Research shows that, on average, women experience a 55% reduction in earnings during the first five years of parenthood, a loss that compounds over time. This drop in income, coupled with the compounding effects of superannuation contributions based on lower wages, has left women retiring with around 25% less super than men. Economists, industry advocates and employers have welcomed this reform, praising it as a long-overdue measure to improve women’s financial security and help close the gender gap in retirement savings. By ensuring that Paid Parental Leave includes super contributions, the Act acknowledges the reality that caregiving responsibilities should not come at the cost of a secure retirement.

The new Act, which takes effect on 1 July 2025, directly addresses this gap by providing eligible parents with an additional 12% of their Paid Parental Leave as a super contribution. This contribution will be in line with the Superannuation Guarantee (SG) rate and will increase over time with any future adjustments to the legislated rate. For many families, this change could amount to a super contribution of up to $3,150, a significant boost that will grow as the Paid Parental Leave scheme reaches 26 weeks by 2026.

This amendment builds on previous government efforts to strengthen the superannuation system, ensuring that more Australians, particularly women, can look forward to a dignified retirement. Alongside reforms to improve the flexibility, duration and income thresholds for Paid Parental Leave, this change underscores the importance of supporting working families both at the time of birth and in the long term.

As this Act takes effect, it represents a significant investment in the future of working women, ensuring that their contributions—both in the workplace and at home—are recognised and valued, setting a new standard for financial equity in Australia.

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