The Australian Government’s recent move to include superannuation contributions in its parental leave scheme marks a significant advancement in the quest for gender equity. This initiative is poised to enhance the financial security of Australian mothers, potentially increasing the retirement savings of a mother with two children by approximately $14,500.
The Super Members Council of Australia (SMC) has lauded the government’s decision, highlighting its potential to benefit around 180,000 mothers annually and reduce the gender superannuation gap. Currently, this gap stands at $65,000 for individuals nearing retirement. Misha Schubert, CEO of the Super Members Council, expressed optimism that this reform would have a lasting impact on the financial well-being of Australian women, helping to bridge the retirement gender gap.
The move is seen as a crucial step towards addressing the ‘motherhood penalty’—the financial disadvantage faced by women during the early years of motherhood, which has long-term effects on their retirement savings. By including superannuation contributions in parental leave payments, the government is taking a bold step towards ensuring that all women can look forward to a financially secure retirement.
Despite women generally living longer and retiring earlier than men, they tend to have significantly less superannuation savings as they approach retirement. This disparity is partly attributed to the lack of superannuation payments during parental leave. The SMC’s analysis indicates that paying superannuation on parental leave could reduce the retirement gender gap by about a quarter, with 94% of the benefits accruing to women.
The implementation of this policy sets a precedent for other employers to follow suit, further narrowing the gender superannuation gap. Additionally, the SMC advocates for an increase in the Low-Income Super Tax Offset, which primarily benefits lower-income women but has not kept pace with tax bracket adjustments.
The Super Members Council is committed to addressing the structural factors contributing to the gender superannuation gap, such as lower workforce participation rates, high childcare costs, lower pay in female-dominated industries, and the undervaluation of unpaid care work. The council acknowledges the efforts of advocates and organizations that have campaigned for this reform over the past decade, recognizing their role in achieving this milestone.
The SMC represents over 10 million Australians with more than $1.45 trillion in retirement savings managed by profit-to-member superannuation funds. Its mission is to protect and advance the interests of its members throughout their lives, advocating for stable, effective, and equitable superannuation policies.
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