Industry Super Australia (ISA) said a decision by the government not to commit to paying superannuation on parental leave could cost a working mother of two up to $14,000 from her final retirement savings.
Sydney Morning Herald reported this week that the federal government had decided to reject a proposal to add superannuation to the Commonwealth’s 18-week paid parental leave scheme, with ministers concerned the measure would have only a small benefit for the amount of money required.
The proposal has previously been supported by a raft of superannuation funds and industry bodies. The government’s Retirement Income Review also found that linking super with the payment of super with the scheme would reduce to a small degree the impacts of career breaks taken by women to raise children.
ISA noted that it is overwhelmingly women taking Commonwealth parental leave pay, with 99.5 per cent of recipients women, compared to just 0.5 per cent men.
“The gender super gap widens dramatically when women are in their 20s and 30s, an age when many women take time out of the paid workforce to raise children, making the payment of super on Commonwealth parental leave pay a vital equity measure,” ISA advocacy director Georgia Brumby explained.
Ms Brumby said that unless the major parties act, working mothers will continue to pay a big future price for taking time out of the paid workforce to raise a family.
“We fear at this election women’s future financial security is going to be sacrificed in the name of fiscal restraint, despite the super payments on Commonwealth parental leave pay being modest but vital to mums’ future retirement savings,” she said.
Association of Superannuation Funds of Australia (ASFA) senior policy adviser Helena Gibson said there is strong support among Australians for policy action in this area.
“Results of a recent ASFA survey show that more than 80 per cent of people agree that government should try to boost the super balances of women who take time out of the workforce to have children,” stated Ms Gibson.
In addition to adding SG to paid parental leave, the superannuation body has also advocated for a Super Baby Bonus of $5,000 for each child a woman gives birth to or adopts in its pre-budget submission.
“ASFA has done some economic modelling which shows that a large portion of the inequity that arises when having a baby could be neutralised for a woman earning $80,000 and eliminated for a woman earning $60,000 or less by introducing [these] simple measures,” said Ms Gibson.
Australian Institute of Superannuation Trustees (AIST) chief executive Eva Scheerlinck said adding super to paid parental leave would allow parents to continue building their retirement savings while taking time out of the paid workforce to care for children.
“It would be another step to improving the fairness, equity, adequacy, and transparency of a retirement savings system which, although one of the best in the world, still has room for improvement,” said Ms Scheerlinck.
