Jo Hurley, general manager of growth for Class, told SMSF Adviser the move to pay super for those on paid parental leave is a “great initiative” to get in early to combat the gender superannuation gap before it becomes a problem.
On Thursday, 7 March, the government announced alongside the release of the Working for Women strategy, that from 1 July 2025, it will pay super on government-funded paid parental leave.
The move has been widely welcomed by industry groups including Super Consumers Australia which said it was an “historic win for gender equality”.
Hurley said the announcement is so important because it is “working on the gender super gap problem to prevent it happening in the first place”.
“This strategy works in the period where the gender gap grows rather than using strategies to play catch up down the line,” she said.
“Effectively, if we can prevent the gap occurring and take action to reduce the severity of the gap, the long-term benefit will show in later years.”
Hurley said Class data indicated that women in their early career years were ahead of their male peers on super savings in the SMSF space. Still, the critical period when they may have a career break and take parental leave is when the gap begins to accelerate.
The data released last year showed between the 2017 and 2022 financial years, the gender balance gap for SMSFs administered on Class software had declined from 20.3 per cent to 15.9 per cent
“This initiative is going to help not to have that gap spread so far and help women not to have to implement such aggressive strategies later in life to try and close that gap,” Hurley said.
“With catch-up strategies, we haven’t seen much improvement in the gender gap.”
Peter Burgess, SMSFA CEO, said the association supports the measure to reduce the impact of parental leave on retirement incomes and help close a gender gap that was still a pronounced issue in the super sector.
“The SMSF sector is leading the way when it comes to closing the superannuation balance gender gap, with the balance gap in SMSFs steadily closing since 2017,” he said.
“Higher levels of member engagement combined with legislative changes which have enabled catchup concessional contributions, contribution splitting and encouraged re-balancing strategies to stay within the transfer balance cap, have no doubt been a contributing factor.”
He added evidence suggests the more engaged members are the greater the likelihood of closing the gender super balance gap and although further policy support is needed to address this issue, super payments in paid parental leave are a step in the right direction.
Totally agree. But still, better than nothing at all..
Really? SGC on 20 weeks of government funded PPL comes to $1,900. A big help……..