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Government to pay super on top of parental leave, here’s what it means for you


The new budget measure is set to start from July 2025.

The Federal Government has announced a new measure that will see superannuation paid on top of paid parental leave (PPL) as part of its continuing reform of the government payment.

If the legislation passes it will mean parents with babies born after 1 July 2025 will be able to benefit from the reform.

Minister for Women Senator Katy Gallagher said the changes are designed to support women balancing caring and working responsibilities.

"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 make decisions about balancing care and work easier for women," Gallagher said.

Good for women, good for the economy

Currently, superannuation is not paid on PPL and is a significant contributor to the large gap between women's and men's super balances.

According to a Finder analysis of ATO data, as of the 2020-2021 financial year, the median super fund balance for women between the ages of 65-69 is $201,233, and $213,986 for men.

Treasurer Jim Chalmers said economic inclusion was at the centre of this agenda.

"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 as well. In the long-term, this important change means a more dignified and secure retirement for more Australian women," Chalmers said.

"A stronger paid parental leave system is good for families and good for the economy as well."

What it means for you

Under the proposed changes, superannuation will be added to PPL from 1 July 2025. It will apply to those who receive government-funded PPL and superannuation will be paid at a rate of 12%. Around 180,000 are set to benefit from the reforms.

Full details of the reforms will be released in the budget, due in May.

A welcome proposal

The proposed reforms have so far been welcomed by the industry. UniSuper CEO Peter Chun said it was a welcome and important step in delivering a more equitable super system.

"[it's] one UniSuper and others in the industry have been lobbying to achieve for years. Every dollar counts. No one in Australia should lose out in retirement due to inequity," Chun said.

CEO of Rest, one of Australia's largest profit-to-member superannuation funds, agreed, saying: "We know every super dollar counts for these members, who often work in low-income, part-time or casual jobs. This change will undoubtedly help enable a more equitable retirement future and go some way to address the gender super gap."

This is not the first change to PPL announced by Anthony Albanese's Labor Government. In October 2023, the existing PPL scheme was expanded to 26 weeks, up from an existing 22. The legislation is currently before the Senate and if passed will see PPL increased incrementally, with families having access to 24 weeks from July 2025 and then the full 26 weeks from July 2026.

If you haven't looked at your super in a while, it could be time to switch. Compare super funds to see how your current fund stacks up and, if you decide it's time to switch, you can easily change super funds with our 4-step guide. Need help deciding on a fund? Finder's best super fund picks might be a good place to start.

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