The Albanese Labor Government has taken a significant step towards enhancing financial security for Australian families by introducing legislation to pay superannuation on Government-funded Paid Parental Leave.
Prime Minister Anthony Albanese described the policy as “a modern policy for modern families,” emphasising that it provides choice, security, and rewards aspiration. He added, “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.”
The new legislation, titled the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Bill 2024, was presented to the House of Representatives today. This initiative builds on recent reforms aimed at making Paid Parental Leave more flexible, accessible, and equitable, while also extending the duration of the scheme.
If passed, the legislation will benefit eligible parents with babies born or adopted on or after 1 July 2025. They will receive an additional payment equivalent to 12 per cent of their Paid Parental Leave payment, which will be contributed to their nominated superannuation fund.
Treasurer Jim Chalmers highlighted the reform’s importance in ensuring that women earn more and retire with greater financial security. “Paying super on Paid Parental Leave is part of our efforts to ensure women earn more, keep more of what they earn, and retire with more,” he said.
This reform is expected to bolster the economic security of approximately 180,000 Australian families each year by improving retirement savings. The Paid Parental Leave scheme currently offers financial support to eligible working parents, allowing them to take time off work following the birth or adoption of a child.
Minister for Women, Katy Gallagher, noted that the changes would help reduce the financial penalties women face when raising a family, particularly in terms of their retirement savings. “These long-overdue changes will help ease those penalties and lessen the impact on women’s retirement savings,” Gallagher stated.
The legislation aligns with broader changes to the Paid Parental Leave scheme, which is set to expand to 26 weeks by 2026. As of 1 July 2024, parents have been able to access 22 weeks of Paid Parental Leave, an increase from the previous 20 weeks, offering more support as they care for their newborns.
Minister for Social Services, Amanda Rishworth, added that the move signals the Government’s commitment to valuing parental care and promoting gender equality. “By investing in these reforms, we are ensuring families can get the most out of Paid Parental Leave and exercise more choice and flexibility, especially now that we are adding superannuation for a more secure retirement,” she said.
Subject to legislative approval, a lump sum superannuation payment will be made after the end of each financial year, including an interest component, to those who have received Paid Parental Leave. The contribution will be automatically deposited into the superannuation accounts of eligible parents.
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