More information: super on paid parental leave

In a bid to improve retirement outcomes for Australian women, the government has recently announced that from 1 July 2025 it will commence paying super on government paid parental leave (PPL), along with making other changes to expand the PPL scheme. This follows appeals from unions and women’s rights groups, and a growing body of research which highlights a significant disparity in retirement savings between genders. Data indicates that women, on average, retire with 25% less in their superannuation accounts compared to men, a gap attributed to periods spent out of the workforce for child-rearing.

“[Paying super on government parental leave] helps normalise taking time off work for caring responsibilities and reinforces Paid Parental Leave is not a welfare payment – it is a workplace entitlement just like annual and sick leave”, Minister for Social Services Amanda Rishworth has said.

According to the government, this reform, along with the proposed expansion to the PPL scheme, is key to women’s economic security and is beneficial for the broader economy. Currently, subject to meeting eligibility conditions, a family can receive up to 20 weeks (or 100 payable days) of government PPL at the rate of $176.55 per day before tax, or $882.75 per five-day week (at the national minimum wage for children born or adopted from 1 July 2023). Two weeks out of the 20 available weeks is reserved for each parent. 

Current eligibility conditions for the government PPL payment include:

• caring for a child who was born or adopted from 1 July 2023; 
• meeting the income test – individual adjusted taxable income must be $168,865 or less in the 2023–2023 financial year. If the individual income test cannot be met, the family income test can be used. Under the family income test, an individual can qualify for government PPL if their combined adjusted taxable income, along with that of their partner, is $350,000 or less;
• not working on parental leave pay days, except for allowable reasons;
• meeting the work test – the individuals must have worked both:
  • for 10 of the 13 months before the birth or adoption of the child; and
  • for a minimum of 330 hours (around one day per week) in that 10-month period;
• meeting the residency rules – the individual must be living in Australia and have either Australian citizenship, a permanent visa, a special category visa or a certain temporary visa. Newly arrived residents may have to wait two years before getting government PPL; and
• registering or applying to register the child’s birth with the state or territory birth registry if the child is a newborn.

With the passing of recent legislation, the PPL scheme will be expanded from 1 July 2024. From that date, individuals and families will have access to an extra two weeks of leave, giving 22 weeks in total, which will increase to 24 weeks from 1 July 2025 and to 26 weeks from 1 July 2026. This means a total of six additional weeks of PPL for new parents, and by 2026, a total of four weeks will be reserved for each parent on a “use it or lose it” basis, which will help encourage greater sharing of the care responsibilities. 

The number of PPL days that a family can take together at the same time will also be increased from the current two weeks to four weeks from 1 July 2025, which will increase flexibility for families and support parents to take time off work together. The government hopes that these changes – along with reforms to child care and parenting payments – will mean a more dignified and secure retirement for more Australian women.

Source: Ministers for the Department of Social Services - Media Release 
www.servicesaustralia.gov.au/parental-leave-pay