New measure seeks to normalise parental leave, reduce retirement income gap
The Australian government announced on Thursday that it will start paying 12% superannuation on top of its Paid Parental Leave (PPL) starting July 2025.
In an announcement, the government said the move will help normalise parental leave as a workplace entitlement and reduce the impact of the leave on retirement incomes.
"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% less super than men," said Minister for Women Katy Gallagher in a statement.
"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."
According to the government, this initiative will build on the government's move to modernise the PPL scheme, which it aims to expand the payment to a full six months by 2026.
Businesses, union welcome super pay
The Business Council of Australia welcomed the move in a statement.
"These reforms will assist in closing the gender divide on superannuation balances at retirement," said Bran Black, chief executive of the Business Council of Australia. "This reform should be part of a broader strategy in boosting participation, productivity, and real wages."
Black, citing data from the Workplace Gender Equality Agency, said 81% of businesses offering paid parental leave also pay superannuation as part of the benefit.
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"Adding superannuation contributions to the government payment is the right thing to do for both women and the economy," he said.
The Australian Council of Trade Unions also welcomed the announcement, calling the move a "phenomenal policy" for working women.
"This will take us one step closer to retirement equality and finally rectify a glaring gap in our retirement income system," said ACTU assistant secretary Joseph Michell in a statement.
"We commend the Albanese government for taking this historic step and recognise the tireless campaigning by union members over the years to make this such a priority issue."