‘Horrible’: Why we need to change this appalling reality

Aussie mum Michelle Maynard estimates she will have lost as much as $100,000 - just by having two kids.

Aussie mum Michelle Maynard estimates she will have lost as much as $100,000 in superannuation by the time she retires — just from having two kids.

The 37-year-old took 10 months off work for both children and accessed the government’s 18 week paid parental leave but no super is paid on the scheme.

Despite being an accountant Ms Maynard didn’t realise until recently that she wasn’t paid any super for taking the time out to care for her babies, now aged 10 and 6, and it’s cost her hundreds of thousands of dollars.

She describes the financial penalty that hits women as “horrible”.

While she lost about $5000 from her superannuation for each child both from the government scheme and being out of the workforce for months, she said this doesn’t tell the full story.

“A key thing is the earlier the money is in your super the better returns you get with longevity. So $5000 over 10 months doesn’t sound like much but with compound interest and it sitting in super for 30 years it’s about $100,000 in lost savings, which is incredible,” she told news.com.au

“People say it’s just a short amount of time and it’s not going to mean much difference, but then why are women retiring with so much less super?”

The super gap between men and women is shocking with a whopping 28 per cent difference.

Women retire with a median superannuation balance of $146,900, compared to men who walk away with $204,107 at retirement when aged 60 to 64 years, recent data from KPMG found.

The huge money gap between women and men when they retire is appalling – that’s why news.com.au believes the next Australian government should commit to paying superannuation while mums are on paid parental leave.

Michelle wants to see both major parties commit to the change. Picture: Supplied

The average woman would have to add an extra $236 per month out of her own pocket into their super or work an extra 11 years to retire with the same super balance as men, found a report from fintech company Finder.

The super sting has already cost up to 1.6 million working mothers, who have accessed the federal government’s paid parental leave scheme, a staggering $1.86 billion from their retirement savings in the last 11 years, Industry Super Australia found.

Close to 171,000 women missed out on $244 million in super payments in the 2020/21 financial year alone, it showed.

Yet, the gender super gap for working mothers is getting worse as both major political parties refuse to commit to paying super on the government parental leave scheme.

Since 2013 the gender super gap between men and women in their early 30s has steadily increased, Industry Super Australia found.

Women aged between 30 to 34 had 12 per cent less super than men in 2013-14 but this has blown out to 17 per cent by 2018-19, ISA found.

Michelle said the issue is further complicated by the cost of daycare preventing some women from returning to work, as well as women only going back part time – all impacting on super balances. Picture: Supplied

The West Australian mum said a short amount of time out of the workforce is costing women in the long term.

“It’s horrible, it’s disappointing absolutely, and it’s a cost that’s worn by mothers,” she said.

“It’s one that’s not front of mind for a lot of people and unless you do the sums, you don’t realise how much money you are missing out on.

“There definitely needs to be more focus on it from employers and government should be paying superannuation, as it’s part of our salary package, and we know it’s an issue that women are retiring with less super.”

Ms Maynard revealed that her husband had $50,000 more in his superannuation compared to hers, which she said was a big difference seeing as they earned relatively similar amounts when working full time.

It is also overwhelmingly women taking up the government’s paid parental leave too with 99.5 per cent compared to just 0.5 per cent of men.

Taking just one year of parental leave from full-time work will cost the average female $16,800 in lost super, Finder’s report revealed.

Women are further penalised when many choose to work part time. If a mum works a four day week for the first two years of the child’s life, their lost super increases to a staggering $39,500, Finder’s report showed.

The gap in superannuation is also responsible for an estimated 40 per cent of older single retired women to live in poverty too, Women in Super found.

Michelle Maynard wants to see a change now. Picture: Supplied

The major political parties positions

Last month, Liberal’s Minister Women’s Economic Security Jane Hume confirmed the party would not adopt a policy to pay superannuation on the paid parental leave scheme, despite it being recommended by Treasury’s retirement income review.

The review found paying super to those who claim government parental leave pay would only increase the cost of the $2.2 billion scheme by an extra $200 million annually – less than 1 per cent of the total PPL budget.

At the last election, one of Labor’s policies was that it would pay superannuation on the government’s paid parental leave scheme – yet it has failed to commit to the policy this time around.

The Labor Party said it hasn’t dropped the policy and it’s under review.

However, Labor indicated back in March the policy was under review and is yet to declare its position just three weeks out from the election.

“We have been consulting with stakeholder and we have been saying the same thing privately that we say publicly, which is that this is a very good policy idea and we need to weigh it up against a whole range of other great policy ideas,” Labor’s treasurer Jim Chalmers said last week.

Amanda Rishworth, Labor’s Shadow Minister Early Childhood Education and Development, also wouldn’t reveal if she would urge colleagues to stick with the policy.

Michelle said the government needs to lead the way on this reform. Picture: Supplied

Ms Maynard, who has a son and daughter, said many women are pushing the issue back as a “future me” problem.

“When you’re having a baby, you much rather have money in the bank account as you’re trying to make mortgage payments and pay bills, especially while on maternity leave, and you don’t focus on the future where women are losing out on hundreds of thousands of dollars,” she said.

She added that the government needed to set an example and take the lead on the issue to push the private sector to also follow.

“For women super definitely needs to be paid on parental leave because if the government isn’t placing emphasis on super, than how do people see it as important?” she said.

Industry Super analysis from last year found not only was the commonwealth parental leave scheme one of the last leave entitlements on which super was not required to be paid, but it is also the option available to 50 per cent of Australians who work in the private sector.

Bernie Dean, chief executive of Industry Super Australia, said the fact the gender super gap had gotten worse showed something needs to be done.

“These figures show mums in paid work are going backwards and they can’t afford to have yet another government walk past this entrenched inequality while talking a big game on gender equality,” he said.

“Whoever forms the next government needs to front up and pay super to those mums who take paid parental leave.”