This information was published in the February 2022 issue of ProPrint, on behalf of ProPrint Awards Emerging 50 Foundation Partner – Media Super. To read the full magazine, please click here.
Many people will receive paid parental leave from their employer, and they may be eligible for the Commonwealth Paid Parental Leave scheme. However, most Australian working parents do not receive super payments while on parental leave, as employers are not required by law to make these payments. Missing out on super during parental leave can significantly impact the amount of retirement savings parents will have down the track.
Here’s how parental leave affects your super and what you can do to continue building your super balance.
Super and parental leave
If you go on holiday for a few weeks or take some time off when you’re sick, your employer still has to contribute to your super. But if you’re taking time out of the workforce to care for children, there’s no obligation under superannuation law for your employer to pay you super during your paid parental leave.
Some private companies will choose to pay super to employees on parental leave anyway – but Industry Super Australia estimates the number of employers currently doing this is less than 7%1. The Commonwealth Paid Parental Leave scheme does not include a provision for super which means most Australian parents are missing out on super payments for anywhere from six to 12 months while they take time off paid work to care for their new baby.
The years when most people start families also happen to be some of your prime salary earning years in the workforce, so not receiving super during this time can significantly impact your retirement savings. For example, Industry Super Australia estimates that missing out on super during maternity leave costs the average mother of two up to $14,000 in retirement savings (1).
What missing out on super means for Australian women
While a lack of super payments on parental leave can affect parents of any gender, women are disproportionately affected by this situation. 99.5% of recipients of the government’s Commonwealth Paid Parental Leave scheme are mothers meaning that the burden of lost super falls mainly on women.
Australian women are earning, on average, 13.4% less than their male counterparts (2) due to the gender pay gap. Add the complication of lost super from parental leave, and it is even more difficult for women to grow their retirement balances at the same rate as men.
What can you do to make up for this gap in super?
The burden of closing the gender wage gap shouldn’t fall only on women – it’s the responsibility of everyone to make sure that our social and economic systems support people of all genders to live comfortable lives in retirement.
Industry bodies, such as Women in Super and the Australian Institute of Superannuation Trustees, have launched campaigns to encourage the federal government and private sector to include superannuation in their parental leave policies.
“The Australian Institute of Superannuation Trustees estimates that women retire with nearly 35% less super than men, with more than 80% of women retiring without sufficient savings to fund their intended retirement (3).”
It’s unclear if this legislation will change in the future, but in the meantime, there are several steps you can take to put your super in a good place while you’re on parental leave:
- Consolidate your super into a single account (4) to stop paying unnecessary fees and take greater advantage of the benefits of compound returns.
- Make additional contributions to grow your super – especially if you’re not working or working part-time.
- Investigate spousal contributions as they can be beneficial if one partner isn’t working or is earning a lower income.
- Check if your employer offers super payments during parental leave.
Find out more ways to help boost your super balance at mediasuper.com.au/rebuild
We are here to help
Everyone’s financial situation is different, and some strategies for boosting your super might be more suitable for you than others. Our team is here to help you make the right choice for your needs.
If you have questions about your super or want to know more about boosting your savings, give us a call on 1800 640 886 and speak to one of our friendly Helpline Advisers today.
Disclaimer
This article contains general information and does not take into account your personal objectives situation or needs. Before making any financial decisions about Media Super you should first consider the Product Disclosure Statement at mediasuper.com.au/pds and read the relevant target market determination at mediasuper.com.au/tmd. Issued January 2022 by Media Super Limited (ABN 30 059 502 948, AFSL 230254) as trustee of Media Super (ABN 42 574 421 650).
1 Industry Super Australia, Report Reveals the $1.6 billion Super Sting on Australian Mums, https://www.industrysuper.com/assets/FileDownloadCTA/Report-reveals-the-1.6-billion-super-sting-on-Australian-mums.pdf
2 Workplace Gender Equality Agency, Australia’s Gender Pay Gap Statistics 2021, https://www.wgea.gov.au/publications/australias-gender-pay-gap-statistics
3 Australian Institute of Superannuation Trustees, Pay Super on Paid Parental Leave, https://www.aist.asn.au/Advocacy/Policy-advocacy/Super-on-PPL
4 Before making a decision to combine your superannuation, you should consider any costs, change to insurance cover or loss of benefits that may apply and, if necessary, consult a qualified financial adviser.
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