Scott Morrison’s decision to dump plans to pay future mums superannuation when they go on parental leave will cost future mothers an estimated $33,000.
Despite speculation of the reform as an option being considered, the hopes of working mums were dashed on budget night.
Instead, the federal budget did not extend super to Paid Parental Leave (PPL) payments or toughen requirements for employers to keep paying super when women are on leave.
However, the Morrison Government did opt to abolish the threshold that requires workers to earn $450 a month with a single employer before super is paid, a reform that will help women working part-time.
Industry Super Australia chief executive Bernie Dean said the average female worker would miss out on an estimated $33,000 in employer contributions as a result of the federal budget’s failure to act on paying super when women are on paid maternity leave.
Under the Industry Super example, a future mum would lose $13,500 over her lifetime as a result of the Morrison Government’s refusal to make a modest super payment linked to the PPL scheme and $33,000 in total when you include employer contributions based on average earnings.
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“The only type of leave that super is not paid on is parental leave, we need to end this pregnancy tax that harms mums’ retirement savings,” Industry Super chief executive Bernie Dean said.
“Removing the $450 threshold was an important step in dealing with system inequities that lead to women persistently retiring with far less than men, but it is disappointing that the government is continuing to expect that mums sacrifice their retirement savings to raise children.
“The government is taking positive steps towards bridging the gender super savings gap but it must do more – starting with paying super on every dollar earned, including Commonwealth Paid Parental leave, and mandating that super is paid on employer parental leave.”
Australia’s Paid Parental Leave Scheme currently ensures that all eligible working parents – overwhelmingly mothers – receive up to 18 weeks of pay at the rate of the national minimum wage.
However, the PPL scheme currently does not attract the superannuation guarantee and that means there’s no super paid when you’re on leave, unless your employer voluntarily decides to make payments.
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Parental Leave Pay is currently $150.78 per day before tax, or $753 a week.
If the Morrison Government had moved to extend the super guarantee to women under the government’s PPL scheme, it would have topped up eligible mums’ super by around $1400 for each child, but that amount would grow to an estimated $13,500 over their working lifetime.
The Industry Super figures confirm that women’s child-bearing years are when the super gap really opens up for women.
By the time women retire, they have a median balance of $150,000, compared to men who have $200,000 in super.
That’s a $50,000 retirement incomes gap based on median balances, but of course for many women the gap between their super balance and their partners’ is much bigger.