The Commonwealth's paid parental leave scheme has recently undergone two significant changes, marking a historic shift in policy. In a move aimed at addressing a longstanding "gender blind spot" in the retirement system, the Albanese government has announced that superannuation will soon be integrated into the scheme.
Effective from July 1 next year (2025), new parents will receive an additional 12 percent superannuation on top of their Commonwealth-paid parental leave. This much-anticipated change is projected to benefit approximately 180,000 families.
The current payment is calculated based on the minimum wage of $882.75 per week. While this amount is set to increase with inflation by the time these reforms are fully implemented, the significant implication is that parents will see nearly $2,800 being allocated into their retirement savings – a substantial addition that was previously unavailable.
Minister for Women, Senator Katy Gallagher, underscored the importance of this reform, citing data that shows women retire with approximately 25 per cent less superannuation than men on average, often due to career breaks to raise children. "Paying super on government parental leave is an essential investment aimed at bridging the super gap and facilitating better work-life balance for women," noted Senator Gallagher. The government's goal is to narrow the gender superannuation gap and afford women more flexibility in managing caregiving responsibilities alongside their careers.
While the inclusion of superannuation marks a significant stride forward, the increase in payment weeks also brings immediate relief to households across Australia. Currently, parents are eligible to apply for up to 20 weeks of parental payments per family. Under the new changes, this number will rise to 22 in 2024, 24 in 2025, and eventually reach 26 weeks in 2026. These progressive adjustments underscore a commitment to supporting families and advancing gender equality in the workforce.
Overall, the combined changes will put extra money in Australian families' pockets, both in the present and in their retirements.