Report reveals the $1.6 billion super sting on Australian mums

Australia’s mothers have missed out on more than $1.6 billion in retirement savings because the government refuses to pay super on its parental leave scheme.

Up to 1.45 million mothers have received Commonwealth Parental Leave Pay in the last 10 years, but while they took time out of paid work to raise children, they sacrificed thousands in retirement savings. In the 2019-20 financial year alone 170,860 women missed out on $216.7 million in super payments.

Parental Leave is one of the only forms of paid leave that there is no requirement to pay super and the government does not pay the super guarantee on its scheme.

A new Industry Super Australia (ISA) report launched today by former Workplace Gender Equality Agency director Libby Lyons, found paying super on parental leave would be a concrete step towards addressing the gender savings gap, which sees women near retirement have about a third less super than men.

ISA’s Paying Super on Parental Leave report calls on:

„  The federal government to set an example and pay super on Commonwealth Paid Parental Leave. Not paying super on its scheme costs a mother of two $14,000 from her final retirement savings.

„  State and Territory Governments to pay all its staff super on paid parental leave. At least 400,000 state- government employed workers – most of which are women – are missing out.

„  More private companies to lead the way and pay super on their parental leave scheme. ISA analysis of enterprise agreements shows less than 7 per cent include a provision to pay superannuation on paid parental leave. At least 2.3 million employees who are on workplace agreements are missing out.

If the government made a modest payment of super linked to the Commonwealth’s 18-week paid parental leave scheme – paid at minimum wage and available to most working mothers – it would be an important equity measure to ensure women’s savings keep pace and set the example to other employers.

Overwhelmingly it is women that are missing out, 99.5% of the Commonwealth Parental Leave Pay applications are women and just 0.5% men.

Up to 15,870 mums in the electorate of Lalor in Melbourne’s western suburbs lost $18 million super, the most in the nation. In NSW, the most lost was in the Western Sydney electorate of Greenway (see table 2).

A mother of two who received super on Commonwealth Parental leave Pay and from their employer would have $26,500 more super at retirement.

Comments attributable to former Workplace Gender Equality Agency director Libby Lyons:

“In Australia today far too many women and men do not have access to paid parental leave which includes superannuation payments – this is having a detrimental financial impact on families, especially women, and is impeding our country’s economic growth.”

“The government has the opportunity, to heed the clear and compelling business case to lead by example and pay superannuation on its parental leave scheme, something smart employers are already doing.  We must stop penalising Australian women and men for having children”  

Comments attributable to Industry Super Australia Advocacy Director Georgia Brumby:

“Unless the Federal Government acts, millions of women will continue to pay a price for taking time out of the paid workforce to raise a family, missing out on super and ending up with thousands less at retirement.”

“This is an opportunity for the Prime Minister and governments of all levels to lead the way and ensure super is paid on parental leave. Otherwise, we’ll continue to see too many women retire into poverty.”

Table 1: Forgone super payments from super not being included in Commonwealth Paid Parental Leave:

Source: ISA analysis of Department of Social Services data

Table 2: Top 20 electorates for lost Commonwealth Paid Parental Leave super payments