Gender ‘blind spot’ on parental leave needs to end

Paying super on taxpayer-funded parental leave is the next obvious step to further help close the gender superannuation savings gap and send a message that caring for children is valued by society.

The members of the HESTA super fund, more than 80 per cent of whom are women, say taking parental leave has left them behind in saving for their retirement, causing them concern and financial stress.

Debby Blakey, the chief executive of HESTA, says the fund’s members are worried about not having enough to retire on because they need to take time out of the workforce to raise children.

HESTA super fund chief executive Debby Blakey says the fund’s members, most of whom are women, want more government action to address the super gender imbalance.Credit: Tash Sorensen

Not paying super on government-funded parental leave is a financial penalty on women, she says.

“It’s unacceptable and deeply unfair, and that’s why we want to see gender equality measures [in the federal budget to be handed down on March 29] and why we’re calling for superannuation equity reform to be a priority in the next term of government,” Blakey says.

“Our super system has had a gender blind spot for far too long,” she says. Government-funded parental leave is paid at the national minimum wage for up to 18 weeks for people with an income of less than $151,350 of a year.

Figures from the Association of Superannuation Funds of Australia (ASFA) show males aged 60 to 64 as of June 2019 had a median super balance of $178,800 and females had a balance of $137,050 - a gap of 23 per cent.

ASFA says taking time out of the paid labour force for family responsibilities has a big impact on the super balances of women at retirement. ASFA’s analysis shows that taking a year off for each of two children can lead to 10 per cent less in super at retirement.

However, the Morrison government has rejected a plan to add super to taxpayer-funded parental payments as part of the federal budget because the costs are considered to outweigh the benefits. It would cost an additional $200 million annually to include superannuation.

There is little doubt that paying super on taxpayer-funded parental leave would prove popular with women, as they account for more than 90 per cent of all parental leave taken by primary carers.

HESTA, which covers workers in the health and community services sectors, found three in five members who had taken parental leave from among the 2,300 members surveyed were concerned about not having received super for that time, and the effect it would have on their financial security.

Analysis from Industry Super Australia found 1.6 million women had taken up the government-funded paid parental leave scheme since it was introduced a decade ago, but had missed out on almost $2 billion in super contributions.

ASFA wants to see the introduction of a superannuation baby bonus; a proposal supported by HESTA, which is also calling for universal access to affordable childcare.

Under ASFA’s proposal, a $5,000 baby bonus would be paid into the person’s superannuation account and could benefit up to 300,000 women a year.

“Broken work patterns, COVID-19, and the early release of superannuation, which was used to help get Australians through the pandemic, have eroded the retirement savings of low-income earners and women in particular,” says Martin Fahy, the chief executive of ASFA.

Labor is still considering whether to take the paying of super on government-funded parental leave to the election. It was part of the party’s platform at the last election.

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