Government announces superannuation boost – here's who benefits

The Federal Government has announced a major change to superannuation today.

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Superannuation will be added to the Federal Government's paid parental leave (PPL) benefit under a reinstated policy proposal announced today.

Federal Labor previously announced this policy idea prior to the 2019 election. But the party dumped it before the May 2022 poll due to higher priorities.

Today, Minister for Women and Finance, Senator Katy Gallagher, said it was back on the agenda.

The proposal will be included in the May Budget with a proposed start date of 1 July 2025.

This means the start date will be after the next Federal election, which must be held by May 2025.

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How much superannuation will new parents get?

The superannuation guarantee rate increases to 12% on 1 July 2025.

Thus, parents receiving PPL will be paid 12% of the national minimum wage, which is currently $882.80 per week.

Ms Gallagher said adding superannuation to PPL would bring it into line with other entitlements like sick leave and annual leave, and reduce the impact of parental leave on retirement savings.

Ms Gallagher said that on average, women retire with 25% less superannuation than men.

This is largely because many women take time out of the workforce to care for their children.

Gallager said:

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.

Minister for Social Services, Amanda Rishworth, said PPL was not a welfare payment but a workplace entitlement.

Ms Rishworth said Labor had made PPL more accessible, flexible and gender-neutral, and adding superannuation was an additional investment in the scheme.

The Treasurer, Jim Chalmers, said the government wanted women to have greater economic inclusion.

Chalmers said:

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.

Time on PPL to be expanded under Bill before Senate

Federal Labor is also seeking to expand the PPL scheme, with a Bill currently before the Senate that proposes a phased extension of the scheme from 20 weeks at minimum wage to 26 weeks by 2026.

If passed, new parents will be entitled to an extra fortnight of paid leave from 1 July this year. This will increase to 24 weeks from 1 July 2025 and 26 weeks from 1 July 2026.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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