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Super payments on parental leave to help close the gap

Superannuation will be included in paid parental leave payments from July 1, 2025.

Superannuation will be included in paid parental leave payments from July 1, 2025. Photo: AAP

Superannuation will be included in paid parental leave payments as the government unveils a national strategy to achieve gender equality.

Finance Minister Katy Gallagher will announce the reform and the strategy at the National Press Club on Thursday.

The measure will come into effect on July 1, 2025 and follows the government’s pledge to expand paid parental leave to six months by 2026.

Senator Gallagher said the reform was about closing the gap between the amount of super earned by men and women.

“It’s a very significant investment, but we think it’s an investment that’s worthwhile,” Senator Gallagher told ABC TV on Thursday.

“It … helps close that super gender pay gap but also sends a very strong message that we don’t think women should pay a financial penalty when they take time out of their paid work to care for children.”

Senator Gallagher said while a final amount for how much the scheme will cost has yet to be determined, the superannuation pledge will be funded in the federal budget, and not tied to an election commitment.

The 12 per cent super contribution will help 180,000 families that receive the benefit each year.

Unpaid and paid care responsibilities needed to be more equally shared, the strategy said.

“Equality cannot be achieved without addressing who takes on, and who is expected to take on, caring responsibilities,” it said.

“Nor can it be achieved without valuing the substantial contribution unpaid and low paid care makes to families, the community and, notably, the Australian economy.”

Senator Gallagher said while some employers already pay super on top of any paid parental leave, the changes would ensure all people using the leave would be able to access it.

“We know that women, because of their various caring roles primarily, but also because of the nature of the work that women predominantly do, retire with a lot less super than men,” she said.

“We’re sending women a message that … we value the care that they provide for young children throughout their careers and also that this will ensure that we’re doing what we can to close that super pay gap.”

It’s estimated women end up have one-third less in their super balance than men by retirement age.

Adding superannuation to paid parental leave was recommended by the women’s economic equality taskforce.

The super scheme has been welcomed by the industry, with Super Members Council chief executive Misha Schubert labelling the move as historic.

“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,” she said.

“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.”

Chief executive of the Association of Superannuation Funds of Australia Mary Delahunty said the change would be a huge boost to equity.

“For too long, women have retired with significantly fewer savings on average than men as a result off work or working reduced hours to have and raise children. It’s about bloody time,” she said.

ACTU assistant secretary Joseph Mitchell said the move would rectify a gap in the superannuation system.

“So many women retire with far too little and this is going to make a difference for hundreds of thousands of women and families every year who will no longer miss out on vital contributions to their nest egg,” he said.

-AAP

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