Despite our parental leave win, super is still sexist

You probably know that women typically retire with 25 per cent less super than men. But do you realise that’s because super is – while not explicitly – implicitly sexist?

There is more than one reason men usually retire richer – women typically live longer (by about 4 years), earn less (an average of 21.7 per cent) and are more likely to take a career break to raise children.

More needs to be done to help close the super savings gender gap.Credit: Matt Davidson

But a big discriminating factor has been fixed this week: the lack of super on paid parental leave (PPL). Here’s what’s happened.

In a move I’ve been advocating for for over a decade – even writing an open letter to then-prime minister Tony Abbott in this masthead in 2015 – last week federal parliament passed legislation adding superannuation payments on top of PPL.

A typical parent loses about $6000 each year spent caring for kids, says research by HESTA.

The dollar deficit from just this super break snowballs to $46,000 by retirement, according to RiceWarner Actuaries. Its modelling assumes a pretty standard five-year, full-time career break of one year out for the first child, part-time for the next two years, and then another year out and another part-time … so it’s quite conservative.

The payment of super on PPL will add billions of dollars to the collective retirement funds of parent carers – of any gender – across the country.

How it will work now

To get PPL – and the new super payment – you must have an adjusted taxable income of $175,788 or less as an individual, or if you don’t meet the individual income test, you can use a family income test of $364,350. That’s for the 2023-24 financial year, as it’s the one before the birth or adoption of the baby that counts.

The PPL payment itself is at the national minimum wage of $915.80 per week, which is $183.16 per day before tax. This is for 20 weeks with two weeks reserved for each parent, going up to 26 weeks with four weeks reserved by July 1, 2026.

From July 1, 2025, you’ll now also get a maximum super payment of about $3000, paid as a lump sum at the end of the financial years you receive PPL – with interest.

It will be at the 12 per cent super rate that will apply from next financial year (and will be for people who become parents from that date).

Is it enough to fix sexist super?

Sadly, no. This measure – though laudable – replaces only a maximum of 26 weeks of super and only at the minimum wage. But there are ways that families can work the system to redress the rest.

Firstly, the spouse super contribution is designed to help equalise super balances and enlarge that of a ‘non-working’ spouse. (Quotation marks because raising children is the hardest work there is!)

If the higher-earning spouse pays $3000 after tax into the super of the lower-earning one (on less than $40,000), they get a tax offset of up to $540.

Once the primary carer is earning again in some capacity, provided those earnings are under $60,400, you can get a free $500 in your fund.

Under a scheme called the super co-contribution, you have to contribute $1000 after tax into your super fund throughout the year – so $19.25 a week. On income up to $45,401, you get the full $500 government top-up; on $60,400, it runs out.

But if the extra money necessary to do the above is just not a thing right now, know you can mop up five years of unused super contribution limits and consider putting that in the plans.

And while we can’t do much about ‘longer’ female longevity, closing the gender pay gap would sure help correct super’s inherent gender bias.

Ladies, your super is ‘manning up’ – but you need to do more.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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