For years, a career break to care for a newborn or adopted child has come with an invisible price tag - one that lingers long after parents return to work. The superannuation gap between men and women, driven in part by time spent out of the workforce for caregiving, has left many parents - particularly mothers - at a disadvantage in retirement.
That’s set to change. In a landmark reform passed in October 2024, the government will begin paying superannuation contributions on Commonwealth-funded Paid Parental Leave (PPL) from 1 July 2025. This long-awaited policy shift recognises the economic value of caregiving and ensures that parents taking time off to raise their children won’t be left behind financially.
Minister for Social Services Amanda Rishworth underscored the significance of this move, noting that women currently retire with an average of $51,700 less in superannuation than men—roughly 25% less.
“This reform signals that caring for babies is valued and helps to normalise parental leave as a workplace entitlement,” she said.
So, what does this mean for you? Here’s what you need to know.
The new superannuation payments will apply to parents accessing government-funded Paid Parental Leave for children born or adopted on or after 1 July 2025. This means that parents who are already receiving PPL for children born before this date will not be eligible.
In line with the increasing superannuation guarantee rate, from 1 July 2025, superannuation contributions will be 12% of the PPL payment.
Eligible parents will receive the additional contribution, including an interest component, to their nominated superannuation account following the end of the financial year in which the PPL was paid. The ATO will make the first contribution payments in July 2026.
The PPL payment period increases to 24 weeks from 1 July 2025, moving to full 6 months from 1 July 2026. The minimum wage is expected to increase each year following the annual Fair Work Commission reviews. This means that eligible parents may receive between $2,600 - $2,700 in super plus interest for each birth or adoption.
Parents will continue to apply for Parental Leave Pay through Services Australia, which will assess eligibility for both the payment and superannuation contribution.
CLICK HERE to access the Services Australia ‘How to Claim’ guide.
This reform is a major step forward in ensuring fairer retirement outcomes for parents who take time off work to care for their children. It acknowledges the economic value of caregiving and helps narrow the gender superannuation gap.
By implementing these changes, the government is not only supporting families during their parental leave but also ensuring that the long-term financial security of parents — particularly women - is strengthened.
Traditionally, parents - especially mothers - who take time off work to care for a child experience lower lifetime superannuation savings. This contributes to the gender retirement gap, where women retire with 25% less super than men. By including super contributions (12% of PPL payments), this reform helps parents build their retirement savings even while on leave.
This change acknowledges that raising children is valuable work, and parents should not be financially penalized for taking time off to care for their newborn or adopted child. Superannuation payments on PPL reinforce parental leave as a workplace entitlement, helping to shift outdated gender roles and encourage both parents to take leave.
The cost of raising a child is significant, and taking time off work often leads to a drop in household income. Super contributions help ensure that parents don’t fall behind financially in the long run, allowing for greater financial independence and stability in retirement.
By strengthening the PPL scheme, the government is normalizing shared caregiving responsibilities. This may encourage more fathers and partners to take leave, helping to balance career progression and caregiving between both parents.
Providing superannuation on PPL supports greater workforce participation, particularly for women. Parents who feel financially secure returning to work after leave are more likely to re-enter the workforce and continue contributing to the economy.
As workplaces become more flexible and inclusive, policies like extended PPL and superannuation contributions ensure that Australian employment standards keep up with modern family needs.
This reform isn’t just about money — it’s about fairness and peace of mind for parents like you. If you have any questions about it, come to your Oracle Accounting team – as the best accountants Central Coast, NSW, Queensland, and Victoria have to offer, we can help.
Ultimately, this scheme acknowledges the hard work and sacrifice that comes with raising a child and ensures that stepping away from work to care for your little one won’t leave you financially behind. You shouldn’t have to choose between being there for your family and securing your future — and now, you don’t have to.
Written by Sam Rasmussen
Senior Accountant
Oracle Accounting Murwillumbah
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