Changes to Parental Leave in Australia: Superannuation Contributions for New Parents
In a significant development, new parents in Australia will soon receive superannuation contributions alongside their parental leave payments. This initiative aims to bolster families’ retirement savings by potentially adding nearly $3,000 to their super accounts, a substantial boost that will significantly impact long-term financial security.
Starting from July 1, 2024, parents welcoming or adopting a child will see superannuation contributions equivalent to 12 per cent of their parental leave payments. This aligns with the government’s superannuation guarantee rate, which is designed to ensure Australians save adequately for retirement.
UniSuper’s Melinda Brown highlighted that these changes coincide with an extension of paid parental leave from 22 to 24 weeks, with a further increase planned for July 1, 2026, reaching up to 26 weeks. With paid parental leave based on the minimum wage—which will rise by 3.5 per cent to $24.95 an hour or $948 weekly from July 1—this adjustment underlines a commitment to improving financial outcomes for families.
The government expects this initiative to benefit approximately 180,000 families each year, which could lead to enhanced retirement balances for new parents. Data from the Workplace Gender Equality Agency (WGEA) indicates that 68 per cent of Australian employers offer some form of paid parental leave, with 87 per cent of those also paying superannuation during this period.
Brown encourages those whose employers do not provide super payments during parental leave to advocate for this benefit. Increased inquiries about super contributions could motivate employers to reconsider their policies.
For eligible parents, the Australian Taxation Office (ATO) will directly deposit super contributions from parental leave payments into their super funds. This contribution, referred to as the Paid Parental Leave Superannuation Contribution (PPLSC), will be automatically calculated and processed after the financial year concludes, starting from July 2026. Parents sharing parental leave will each receive contributions based on the leave days taken.
Melinda Brown advises parents to assess their super savings before going on leave. This includes verifying their insurance coverage, as inactive super accounts may lose coverage after 16 months of inactivity unless maintained. Parents should inquire with their super funds about forms to retain this cover.
Furthermore, parents are encouraged to consider making voluntary contributions or spouse contributions to boost their superannuation balance during or before their leave. They can also split employer contributions between partners at the end of the financial year, up to a limit of 85 per cent of the concessional contributions, subject to certain conditions.
Those with multiple superannuation accounts may benefit from consolidating them to reduce fees, a process that can be conveniently done through myGov. Reviewing investment mixes and obtaining tailored financial advice are also recommended, as many super funds now provide limited advice at no extra cost.
In summary, the impending changes to parental leave in Australia represent a significant step towards enhancing financial stability for new parents, equipping them with essential resources to secure their financial future and ensure their superannuation remains a priority during critical life transitions.
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