As Finance Minister Katy Gallagher noted when unveiling the policy last week:“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 per cent less super than men.”
The government’s contribution will help – but there remains a glaring super imbalance between the sexes.Dionne Gain
Under the change,which will take effect on July 1,2025,the government will pay 12 per cent superannuation on top of the 20 weeks of leave offered through the Commonwealth PPL scheme.
In real-dollar terms,the change equates to a weekly contribution of around $106 and just over $2100 over the course of the leave. When the government’s leave scheme extends to 26 weeks in 2026,this will take the contribution up to over $2700.
At first glance,that might not sound like a lot of money. But in the context of superannuation,it’s significant. For many Australian women,the difference come retirement time will be notable.
For the approximate 180,000 parents who access the Commonwealth scheme (),these contributions are estimated to ensure a mother-of-one has up to $7500 more at retirement age,while a mother-of-two will have up to $14,500 more,according to estimates from the Super Members Council.
This policy change acknowledges that domestic labour is just as legitimate as any other form of labour.
The Association of Superannuation Funds of Australia (ASFA) estimates that to have a comfortable lifestyle in retirement,a single person needs a lump sum super balance of $545,000,while a couple needs $640,000. That means people should have a super balance of $76,600 when they’re aged between 30-34,or $122,000 by the time they reach the 35–39 age bracket,the most common age bracket for Australians to have children.
To me,these figures are well below what most people would actually need to enjoy retirement in the way they’d like or to be truly comfortable,but that’s a discussion for another time.
Still,comparing the ASFA guide figures with what’s happening on the ground reveals how falling behind can quickly accumulate and negatively impact women. According to 2019 data from the Australian Tax Office,the average superannuation balance for women aged 30-34 is just $42,240 – that’s an average deficit of over $30,000 from where their balances should be. For those aged 35-39,the average super balance climbs to $66,611. This time,the deficit between what’s needed for a bare minimum “safe” retirement and what is actually there is almost double.
Based on those stark figures alone,$106 a week is clearly not a silver bullet. It’s less than what many women would receive as a super contribution from their employers if they were still working.
We also know that 20 or 26 weeks leave is less time off than most new parents take,with the average Australian taking six to 12 months out of the workforce after a baby arrives. But if the alternative to $106 a week is nothing,I’ll always advocate for something,if only as a starting position on which to build.
While it’s very normal that people will have different super balances come retirement age (a teacher will never match that of a chief executive),gender and a person’s decision to have children should not be the single determining factor whether someone lives in poverty or luxury in their later years. But as we see it played out over and over again in data,research,and reporting,it is.
Through its,the Treasury predicts that in the future,“the gender gap in balances is expected to reduce,but remain persistent,” and notes somewhat grimly,“While women continue to have lower labour force participation and incomes than men,they will continue to make up a higher proportion of those with lower balances in retirement.”
In real terms,this roughly translates to:things will get better,but only nominally,and for as long as women take unpaid leave and work part-time or casually to do what’s best for their families,they’ll have to pay for it when they retire.
So no,$106 is notthefix. Dedicated efforts from employers,further policies,and frank conversations between partners about superannuation being a shared expense (and long-term investment) still need to be had. But as I’ve said,it’s a solid start.
If all of this still doesn’t sound all that impressive or have you buying into the change,there’s also a significant cultural shift in attitude attached to this policy. We might not feel it overnight,or even over a single decade for that matter,but we will feel it in our lifetimes.
Consider this:paying superannuation is a legal requirement for employers as a recognition of their hard work and in recognition of their right to enjoy a dignified and comfortable retirement. In extending this contribution to new parents,the government is formally recognising the very real work of parenting.
This policy change acknowledges that domestic labour is just as legitimate as any other form of labour and that the tireless work that goes into caring for a newborn benefits Australia’s economy in the long term.
It says to the 88 per cent of women who take on the primary caregiver role in the early years of their children’s lives that their personal choices and decisions about what’s best for their family don’t have to come at the expense of their personal financial security in retirement. And that their decision not to work during this period is just as valid as those who do.
Victoria Devine is an award-winning retired financial advisor,best-selling author and host of Australia’s No. 1 finance podcast, Victoria is also the founder and co-director of Zella Money.
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