Calls for government to pay superannuation for women on parental leave

There are calls for the Federal Government to prove it values women by making a change, which could keep them from falling into poverty.

Over a million Aussie mums have missed out on more than $1.6 billion in superannuation in the last decade because the Federal Government refuses to pay super on its parental leave scheme, according to a new report.

Up to 1.45 million mothers have received the Commonwealth’s parental leave pay in the last 10 years, taking time out of paid work to raise children but sacrificing thousands in retirement savings.

Close to 171,00 women missed out on $216.7 million in super payments in the 2019/20 financial year alone.

A new Industry Super Australia (ISA) report launched on Friday by former Workplace Gender Equality Agency director Libby Lyons, found paying super on parental leave would be a step towards addressing the gender savings gap.

Women retire with considerably less money in their super funds compared to men.

There’s a 28 per cent gap between male and female super with woman retiring with a median superannuation balance of $146,900 compared to men who walk away with $204,107 aged 60 to 64 years.

There are calls from ISA for the Federal Government to pay super on parental leave.

A mum-of-two misses out on $14,000 from her final retirement savings because super isn’t paid while she is on parental leave.

Andrea, with her first child, said it was a ‘no-brainer’ for the government to pay super when paid parental leave is taken. Picture: Supplied

Andrea Drake is one of those who is impacted. The Melbourne mum has an 18-month-old and is pregnant with her second child, who is due in November.

She only took two weeks off with her first child as she runs her own personal training business, but this time around she plans to be out of the workforce for at least 20 weeks.

The 35-year-old said her super has already been impacted as her business has been shut down for over 200 days due to Melbourne’s series of lockdowns.

She said missing out on thousands of super while on parental leave was “scary”.

“I think for anyone who takes time away from the workforce it ends up being quite a considerable chunk of money the longer you take off,” she told news.com.au.

“As a business owner, I need to go back to work sooner than most but for mothers that work for businesses or other organisations that may need to take off more time as they don’t have more flexible hours like me, there ends up being even bigger gap on how much super they have versus a male counterpart.

“I think women need to be able to have their own money so they are not reliant on having a husband or partner in their older years.”

Andrea said women should not have to rely on a husband or partner for money in their old age. Picture: Supplied

Ms Drake said it was a “no-brainer” that the government should start paying super on parental leave.

“It’s a very small step to be showing Australian women that they are valued and they are seen as equal in the workplace,” she said.

“I think at the moment when the government is saying they want to see equality in the workplace and when it comes to both leadership and valuing women, I think it’s a very small thing they can be doing to make sure women don’t feel like they are being marginalised or left behind or need to be reliant on having a partner that is able to economically look after them in their older years.”

A mum-of-two who received super on the government’s parental leave or from their employer would have $26,500 more super at retirement, the ISA report found.

Overwhelmingly it is women that are missing out too, with 99.5 per cent of the government’s paid parental scheme applications from women and just 0.5 per cent from men.

A mum-of-two who received super on the government’s parental leave or from their employer would have $26,500 more super at retirement. Picture: Getty Images

Women in Melbourne’s western suburb of Lalor were hardest hit with almost 16,000 losing

$18 million super – the most in the nation.

In NSW, the most lost was in the western Sydney electorate of Greenway with $16 million lost.

“In Australia today far too many women and men do not have access to paid parental leave which includes superannuation payments – this is having a detrimental financial impact on families, especially women, and is impeding our country’s economic growth,” said former Workplace Gender Equality Agency director Libby Lyons.

“The government has the opportunity, to heed the clear and compelling business case to lead by example and pay superannuation on its parental leave scheme, something smart employers are already doing. We must stop penalising Australian women and men for having children.”

Industry Super Australia advocacy director Georgia Brumby added that unless the Federal Government acts, millions of women will continue to pay a price for taking time out of the

paid workforce to raise a family, missing out on super and ending up with thousands less at retirement.

“This is an opportunity for the Prime Minister and governments of all levels to lead the way and ensure super is paid on parental leave,” she said.

“Otherwise, we’ll continue to see too many women retire into poverty.”

Industry Super Australia advocacy director Georgia Brumby said if no changes are made too many women will continue to retire into poverty. Picture: Supplied

The ISA is also calling on State and Territory Governments to pay all its 400,000 staff super on paid parental leave and for more private companies to lead the way.

Its analysis of enterprise agreements shows less than 7 per cent include a provision to pay superannuation on paid parental leave meaning at least 2.3 million employees who are on workplace agreements are missing out.

Individuals with low superannuation balances are more likely to rely on the age pension in retirement. As at December 2020, 55 per cent those collecting the full pension were women, KMPG found.

Poverty is the daily reality for millions of Australian women. By the time they are aged 60, 34 per cent of single women in Australia currently live in poverty, and many are experiencing housing stress and homelessness, Streetsmart Australia found.