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The Super Members Council has urged the government to swiftly legislate the bill to pay super on paid parental leave to help close the gender pay gap.
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SMC calls for ‘swift’ legislation of parental leave scheme
23 August 2024
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The Australian government has been encouraged to quickly pass a bill to legislate paying super on a parental leave scheme that is predicted to boost a mother’s retirement savings by $14,500.
The Super Members Council (SMC) said this bill will put more money in the pockets of mothers and aid in tackling gender inequity.
“Paying super on the Commonwealth parental leave scheme will benefit around 180,000 Australian mothers each year and narrow the gender super gap, which new analysis shows is about $50,000 for those nearing retirement,” SMC said.
The bill, which was introduced into Parliament on Thursday, will enable payments to start on 1 July 2025.
SMC CEO Misha Schubert said she encourages Parliament to pass the newly introduced bill quickly to benefit retired women and mothers.
“This historic reform will make a vast difference to the lives and retirement incomes of generations of Australian women,” she said.
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“It will powerfully propel Australia closer towards the goal of ending the financial ‘motherhood penalty’ in the early years of having children – which has a compounding effect across women’s working lives.”
According to SMC, women have about a quarter less than men as they approach retirement despite living longer than men and retiring sooner.
Analysis by SMC highlighted the gender pay gap significantly widens when women enter their 30s, with the pay gap jumping from negative 2 per cent to 14 per cent between the 25 and 29 age range and the 30 and 34 age range.
This can be attributed to the fact this is the decade many women take time out of their paid workforce to raise children.
For most age ranges, the gender super gap has narrowed over the last 10 years; however, it has gone “backwards” for women in their 30s.
Parental leave is one of the only types of paid leave that does not attract super.
SMC said now that the Australian government will pay super on its scheme, more employers will be encouraged to follow.
“Paying super on parental leave is a highly effective gender equity measure and could reduce the gender pay gap at retirement by around a quarter,” the council said.
“SMC estimates about 94 per cent of the benefits accrue to women and about 170,000 women received Commonwealth parental leave pay in 2022–23.”
If Parliament passes the bill in a timely manner, it will be a momentous step towards making super more equitable in Australia.
“It’s the next big milestone on the road to retirement gender equity and we urge the Parliament to pass the bill swiftly,” Schubert said.
“Australia must continue to make major advances like this to ensure all women can have a financially secure retirement.”
If the bill is passed quickly and efficiently, SMC has recommended that the objective of super legislation, introduced last November, also be passed in the same way.
SMC said it also advocates a boost to the Low-Income Super Tax Offset (LISTO).
LISTO refers to a super tax refund for low-income workers who mostly benefits women, but has not increased in line with tax brackets or rises in the super guarantee.
“More than 700,000 women would benefit from lifting the LISTO which would cost $500 million a year,” the council said.
“If this reform was combined with the super on parental leave, women in the lowest 10 per cent of wage earners would see a 21 per cent boost in their super balance at retirement.”
SMC said it will continue to advocate to address structural drivers of the gender super gap to better benefit Australian women.
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