Retirement
New laws to boost women's retirement savings through paid parental leave
Retirement
New laws to boost women's retirement savings through paid parental leave
The Australian Parliament has passed new legislation that will see superannuation guarantee contributions paid on the Commonwealth Government's Paid Parental Leave (PPL) scheme.
New laws to boost women's retirement savings through paid parental leave
The Australian Parliament has passed new legislation that will see superannuation guarantee contributions paid on the Commonwealth Government's Paid Parental Leave (PPL) scheme.
Set to take effect from 1 July 2025, the reform will provide an additional 12 per cent in superannuation on top of parental leave payments.
Deanne Stewart, CEO of Aware Super and pay equity ambassador for the Workplace Gender Equality Agency, welcomed the change, calling it "a momentous step in improving retirement outcomes for women."
Stewart said: "This is a sensible, responsible and overdue step which will help improve retirement outcomes for parents, families, and particularly women."
The new law aims to address the gender retirement gap, which currently sees women retiring with approximately 25 per cent less superannuation than men.
According to Stewart, "Women still shoulder a disproportionate share of caring responsibilities in families and often take time out of the workforce to do so. This is one of the key reasons the gender retirement gap is so much bigger than the gender pay gap."
Modelling by Aware Super suggests that a low-income woman with two children, accessing 26 weeks of Commonwealth Paid Parental Leave, could be $10,700 better off at retirement due to these additional payments.
The superannuation fund notes that the benefit to individuals could be more than twice the cost of making the payment, due to compounding investment returns.
Aware Super, which manages over $175 billion on behalf of 1.1 million members, has been paying superannuation to its staff on both paid and unpaid parental leave. The fund reports that only 13 per cent of employers currently pay superannuation on unpaid parental leave, while 86 per cent with a PPL scheme pay super on leave payments.
The new legislation represents a significant step towards addressing the gender retirement gap in Australia's superannuation system.
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