Superannuation on paid parental leave – a win for all

From July 1, 2025, superannuation will now be paid on top of government-funded paid parental leave.

This follows ongoing calls from many within government and the wider community to pay superannuation on paid parental leave to help reduce the gender gap in superannuation balances.

This is a win for all families and from a long-term perspective likely saves taxpayers money because there will be less reliance on government age pension if people have more in their own superannuation. These extra government payments will then be invested in people’s superannuation accounts, often for decades, where the benefits can compound.

From a financial perspective, it is beneficial for both members of a couple to have their superannuation balances moving together at similar paces given there is a maximum non-indexed $3,000,000 cap on superannuation. While this sounds like a lot of money, as the cap is not indexed, this is only equivalent to $1,349,000 in today’s dollars for a 30-year-old, by the time they reach age 60. 

For couples interested in making their account balances more even, whether for equitable or strategic reasons, there are a range of options available. For instance, “spouse splitting” allows couples to split super contributions from one partner’s fund to the other (subject to eligibility criteria).

For those concerned about the imbalance in their superannuation, especially in the event of a separation/divorce, it is also worth noting that superannuation forms part of the settlement proceeds. Therefore, you are not disadvantaged if you have a lower super balance and superannuation can be transferred from one spouse to the other in superannuation to help even up the split.

Overall, this policy is a win for everyone. It makes superannuation more equitable and reduces the reliance on government age pension by a greater rate than it costs the taxpayer if we view the policy with a long-term mindset.

Michael is a certified financial planner from Source Wealth.

Photography by Diwei Zhu.