Time together on the couch

Photo: Katie Gallagher.

The Government will pay superannuation on Paid Parental Leave payments from July next year

The Albanese Government will continue its reforms of the Paid Parental Leave (PPL) scheme, and will pay superannuation on the Government payment from 1 July 2025.

The Albanese Government is set to continue its reforms to the Paid Parental Leave (PPL) scheme, introducing a significant change by paying 12% superannuation on the Government payment starting July 1, 2025. The move is aligned with the release of Working for Women: A Strategy for Gender Equality, Australia’s inaugural national strategy aimed at achieving gender equality.

Background and advocacy

Paying superannuation on PPL was a key recommendation of the Women’s Economic Equality Taskforce, and has long been campaigned for by unions and the women’s movement. In a submission made in response to the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023, Women in Super had argued: "It is unfair and discriminatory in modern Australia that one of the only forms of leave that does not attract the superannuation guarantee is accessed predominately by women when other forms of paid leave such as sick leave, annual leave, and long service leave do attract superannuation payments."

Government announcement and progress

In its press release, the Government said: "Taking time out of paid work to care for children is a normal part of working life for both parents. Paying super on Government PPL will help normalise parental leave as a workplace entitlement, like annual and sick leave, and reduce the impact of parental leave on retirement incomes."

The Albanese Government's amendments to Australia’s Paid Parental Leave is currently before the Senate, which will give families an additional six weeks of PPL. If passed, from 1 July this year, families will have access to an extra two weeks of leave (22 weeks total), which will increase to 24 weeks from July 2025 and 26 weeks from July 2026.

Further details of the newly announced measures to pay superannuation on PPL, including cosingst, will be released in the upcoming Budget.

Minister for Women, Senator Katy Gallagher, who is addressing the National Press Club today, said her Government is "serious about making sure women are supported when balancing caring and working responsibilities."

“The data is clear - that when women take time out of the workforce to raise children it impacts their retirement incomes with women retiring, on average, with about 25 per cent less super than men," she said.

"Paying super on Government parental leave is an important investment to help close the super gap and make decisions about balancing care and work easier for women."

Minister for Social Services, Amanda Rishworth, said paying superannuation on Paid Parental Leave is another key step to prioritise gender equality, better value care work and improve women’s workforce participation. “It helps normalise taking time off work for caring responsibilities and reinforces Paid Parental Leave is not a welfare payment – it is a workplace entitlement just like annual and sick leave."

“Paying super on Paid Parental Leave will build on the significant reforms we have and are making. We’ve made it more accessible, flexible and gender neutral and we are expanding the scheme to a full six months," she said.

The Treasurer, Jim Chalmers, said greater economic inclusion for women is at the centre of the Albanese Government’s agenda. “Paying super on Paid Parental Leave is part of our efforts to ensure women earn more, keep more of what they earn, and retire with more as well," he says. “In the long-term, this important change means a more dignified and secure retirement for more Australian women."

“A stronger paid parental leave system is good for families and good for the economy as well."

Industry response

In a statement, Super Members Council of Australia said: "The Australian Government’s decision to pay super on its parental leave scheme is a major stride forward on gender equity that will boost a mother of two’s retirement savings by about $14,500."

"Paying super on the government parental leave scheme will benefit about 180,000 Australian mothers each year and narrow the gender super gap, which new analysis shows is now $65,000 for those nearing retirement," the Council said.

“This watershed reform will make a powerful difference to the lives and retirement incomes of generations of Australian women in the decades ahead - and narrow the gender gap at retirement.”

“It will powerfully propel Australia closer towards the goal of ending the financial ‘motherhood penalty’ in the early years of having children – which has a compounding effect across women’s working lives.”