Parents will receive 12% superannuation – or about $106 a week – on their publicly funded paid parental leave from July 2025, under a major initiative to be announced by the Albanese government.
The decision, expected to cost at least $250m a year to the federal budget, responds to calls from the Women’s Economic Equality Taskforce, unions and the crossbench to pay super on PPL as a way to help close the retirement savings gap between women and men.
The minister for women, Katy Gallagher, and social services minister, Amanda Rishworth, made the announcement ahead of Gallagher addressing the National Press Club on Thursday setting out the inaugural gender equality strategy.
Under the plan, eligible parents with babies born or adopted after 1 July 2025 will receive an additional 12% on their government-funded parental leave paid into their super account.
Based on the current rate of paid parental leave of $882.75 per week, parents would be eligible for at least an extra $106 per week paid into their super accounts. Around 180,000 families receive government-funded paid parental leave payments each year.
The government has said the full cost of the measure will be revealed on budget night, but it is expected to be at least $250m a year, given the Treasury estimated in 2020 that it would cost $200m a year when the super rate was 9.5%.
Excerpts from the Working for Women gender equality strategy state that “to achieve gender equality, unpaid and paid care responsibilities need to be more equally shared, and care needs to be valued and celebrated”.
“The government will prioritise policies that support families to make choices that work for them,” it says.
“Equality cannot be achieved without addressing who takes on, and who is expected to take on, caring responsibilities.
“Nor can it be achieved without valuing the substantial contribution unpaid and low-paid care makes to families, the community and – notably – the Australian economy.”
In its first budget in October 2022 the Albanese government increased paid parental leave from 18 weeks to 26 weeks by 2026, but disappointed super funds by refusing to recommit to pay super, a policy it dropped ahead of the 2022 election.
When Labor announced a reduction in tax concessions for big superannuation balances over $3m, the crossbench – including the Greens and senator David Pocock – pushed it to pay super on paid parental leave. The government responded that it would like to do so, when affordable.
Legislating super on paid parental leave was listed by the Women’s Economic Equality Taskforce in October 2023 as an “immediate action” to improve gender equality.
Gallagher said: “The data is clear – that when women take time out of the workforce to raise children it impacts their retirement incomes with women retiring, on average, with about 25% less super than men.
“Paying super on government parental leave is an important investment to help close the super gap and to make decisions about balancing care and work easier for women.”
Rishworth said: “Paying superannuation on PPL is another key step to prioritise gender equality, better value care work and improve women’s workforce participation.
“It helps normalise taking time off work for caring responsibilities and reinforces PPL is not a welfare payment – it is a workplace entitlement just like annual and sick leave.”
The treasurer, Jim Chalmers, said “greater economic inclusion for women is at the centre of the Albanese government’s agenda”.
“Paying super on PPL is part of our efforts to ensure women earn more, keep more of what they earn, and retire with more as well.”
In 2020, the Treasury said the measure would have “a small impact on narrowing the retirement income gap”, but warned the benefit to retirees also results in “reduced age pension income due to the age pension assets test”.
Women in Super has previously argued that it is “unfair and discriminatory” that super is paid on sick leave, annual leave and long service leave but not paid parental leave, given that 95.5% of primary carers who access paid parental leave are women.
