A new bill has been introduced allowing new Australian parents to earn superannuation on top of government-funded paid parental leave from July 2025, with the aim of closing the gap in retirement savings between men and women.
New mums and dads will be able to receive 12 percent superannuation while using paid parental leave, in the new bill introduced by Social Services Minister Amanda Rishworth on Aug. 22.
Before this new rule, parents who took parental leave did not receive any superannuation during that time.
If passed, the scheme will benefit around 180,000 families a year.
“Through this bill, we are investing $1.1 billion to pay superannuation on government-paid parental leave from July 2025,” Rishworth said.
Prime Minister Anthony Albanese described the initiative as “a modern policy for modern families” that delivers choice, offers security, and rewards aspiration.
“My government is boosting Paid Parental Leave by extending it to a full six months. This strengthens that further, by adding superannuation on it as well,” he said.
Rishworth noted that women, who make up the majority of primary caregivers in this country, often finish their careers with 25 percent less superannuation than men due to the “motherhood penalty.”
“Women with children face an average of 55 percent drop in their earnings in their first five years of parenthood. The effect of lower income compounds over time, increasing the gap between men and women’s superannuation balances at retirement, the data is clear,” she said.
She further told Parliament that “inequality serves no one,” emphasising that paying super on paid parental leave is an important step in reducing gendered gaps in retirement savings.
The government explained that the legislation builds on recent reforms, including expanding the Paid Parental Leave scheme to 26 weeks by 2026.
“Since 1 July, 2024, parents can receive 22 weeks of Paid Parental Leave, up from 20 weeks, resulting in more support as parents take time out of work to care for their newborn,” it said.
It further stated that a lump sum superannuation payment, including an interest component, would be paid following the end of each financial year where a recipient received Paid Parental Leave. The contribution will be automatically deposited into the superannuation accounts of eligible parents.
Rishworth affirmed the Labor government’s commitment to gender equality and improving working conditions.
“One of the best ways to boost productivity and workforce participation is to provide more choice, more support for families, and more opportunity for women,” she said.
While some employers with paid parental leave schemes already pay superannuation on top, the new laws would ensure that parents using government-funded leave can enjoy the same benefit.
“We know paid parental leave is vital to the health and well-being of families, parents, and children. Not only is it good for family, but it’s also good for our economy,” she added.
