The government has announced a new measure to boost the retirement savings of parents who take time off work to care for their children. Starting from July 1 next year, the government will pay superannuation on its paid parental leave scheme, which will benefit about 180,000 families every year.
This is part of the working for women strategy, a national plan to achieve gender equality. Which will be launched by the Minister for Women Katy Gallagher on Thursday. The strategy aims to address the barriers and challenges that women face in the workforce, the economy and society.
The cost of the superannuation payment will be included in the May budget. Parents who are eligible for the government-funded paid parental leave will receive an extra 12% of their payment as a contribution to their super fund. This will align with the employers’ compulsory superannuation contribution, which will increase to 12% of salary by July 2025.
The paid parental leave scheme allows parents to take up to six months of leave, which can be split between two parents and taken flexibly until the child turns two. The government has previously announced that it will extend the scheme to six months by 2026.
The superannuation payment was recommended by the government’s Women’s Economic Equality taskforce. Which was established to advise on policies and programs to improve women’s economic security and participation.
Gallagher said that paying super on parental leave was an important step to close the gender gap in retirement incomes. She said that women often had lower super balances than men because they took time out of the workforce to raise children or care for others. She said that women retired with about 25% less super than men on average.
In addition to the superannuation payment, the government will also announce funding to encourage the uptake of electric vehicles on Thursday.
