Superannuation to be paid on paid parental leave in major win for women

New parents who take paid time off work will receive superannuation contributions from next year, in a significant step towards closing the gender super gap.

Landmark legislation passed the parliament on Thursday morning, meaning eligible parents with babies born or adopted after July 1, 2025 will be paid an additional 12 per cent of their paid parental leave as a super payment for up to 26 weeks.

It will cost the budget about $1.1bn over the forward estimates but is a major win for the Albanese Government which has struggled to execute its reform agenda in the Senate this week.

Paying superannuation on PPL was a key recommendation of the Women’s Economic Equality Taskforce and the government hopes it will improve women’s economic security in retirement.

Social Services Minister Amanda Rishworth said the changes would benefit around 180,000 families each year.

“We know women retire with 25 per cent less superannuation than men – an estimated $51,700 less on average. By investing in these reforms, we are ensuring families can get the most of paid parental leave, exercise more choice and flexibility and have a more secure retirement,” she said.

“This reform signals that caring for babies is valued and helps to normalise parental leave as a workplace entitlement.”

Australian Council of Trade Unions president Michele O’Neil celebrated the news.

“Having a baby shouldn’t cost you a secure and dignified retirement. For too many parents, women particularly, taking time off work to care for children not only impacts their earnings but also their superannuation savings,” she said.

“It’s grossly unfair that women retire with an average of 25 per cent less super than men. The Albanese Government’s reform will go a long way in closing the inequitable gender superannuation gap. No parent should be penalised for taking time out of the workforce to take care of their newborn child.”

From 2026, Australians will be eligible for a full six-months of commonwealth-funded PPL, but there is a push for the government to extend that out to 52 weeks, in line with the Women’s Economic Equality Taskforce recommendation.

Greens senator Larissa Waters said while the superannuation changes were significant, the PPL scheme itself needed broad reforms.

“Paying super on PPL will go some way to closing the gender retirement pay gap, but there is more the Government can and must do to make PPL fairer,” she said.

The Coalition had sought to amend the government’s Bill to give new parents the option of a $2900 lump sum payment or an additional two weeks off work in lieu of super on PPL, but their amendment was defeated.