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How the budget delivered gains for superannuation fund members

Treasurer Jim Chalmers delivered some welcome support to women through superannuation.

Treasurer Jim Chalmers delivered some welcome support to women through superannuation. Photos: Getty/TND

Treasurer Jim Chalmers’ third budget has delivered some important gains to super fund members, particularly women.

Unlike previous years there haven’t been any hidden nasties that will hit super savers or retirees with unexpected penalties.

The most important measure, which will significantly benefit working women, is the extension of superannuation payments to those receiving paid parental leave as part of a Commonwealth package.

That will cost the government $1.1 billion over five years and $600 million a year on an ongoing basis.

Currently those on parental leave who do not have a special arrangement with their employer and meet an income test, are paid $882.75 per week, equivalent to the minimum wage.

There has been no super paid on this amount which has contributed significantly to the reality that women typically retire with 25 per cent less in the super accounts than men.

But from July 1, 2025 that reality will change and those on paid parental leave will be paid super on that at the super guarantee rate, which by then will have reached 12 per cent.

It’s a significant benefit which could deliver a woman with two children as much as $14,500 extra in her balance on retirement, work done by Super Consumers Australia found.

The associated income test, which has limits of $168,865 a year for an individual and $350,000 for a family, and the fact that many professional women have employer-sponsored paid parental leave means the measure applies to relatively few families.

The government expects about 180,000 families a year to benefit, while overall 311,000 women gave birth in Australia last year.

Welcome change

The parental leave measure was welcomed by industry observers.

“Future generations of Australian women stand to add thousands to their super balances, thanks to this change in policy. This is a crucial and long-overdue step in improving their financial security in retirement,” said Mary Delahunty, CEO of the Association of Superannuation Funds of Australia.

Mischa Schubert, CEO of the Super Members Council also hailed the changes.

“It’s a watershed reform that will powerfully strengthen retirement savings for Australian mums and help to narrow the gender gap at retirement,” Schubert said.

The move would deliver significant benefits through future decades.

Future generations of Australian women stand to add thousands to their super balances as a result of this change in policy.

“This is a crucial and long-overdue step in improving their financial security in retirement,” Delahunty said.

Women make up 66 per cent of recipients of paid parental leave (PPL).

Under recent reforms the number of PPL days will increase to 26 weeks in 2026, from 22 weeks currently.

Also of that amount two weeks will be set aside for the partner not taking paid leave compared to one week currently.

Help on payday super

Another important budget measure sees the government aiding business to implement pay day super payments.

Currently employers have three months to make super payments,  which has made it difficult for employees to track the payment of their super entitlements.

Research from SMC has found that 2.8 million working people in Australia are underpaid a total of $4.7 billion of super per year.

“Unpaid super costs workers $1700 a year on average – and our modelling shows payday super reforms could add up to $36,000 to the retirement balances of the lowest 20 per cent of wage earners,” Schubert said.

The government has set a target of July 1, 2026 for super payments to be made on pay day, which will make it harder for employers to avoid payments.

To help employers get over the difficulty of adjusting their systems and deliver some cash flow relief for small business, the budget has promised to spend $315 million to enable the measure to be brought in from July 1, 2026.

Delahunty said ASFA had long called for payday super payments.

“We welcome funding to support this policy’s timely implementation and look forward to continuing to play a key role in realising these changes so Australians get the super they are entitled to,” Delahunty said.

The budget is also targeting unpaid super entitlements with $13 million extra being spent over four years to catch up with unpaid super caught up in business failures.

The Treasurer expects the move to net the government $63.1 million in extra tax and boost super  balances by $44.4 million over four years.

The New Daily is owned by Industry Super Holdings

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