Financial modelling from HESTA shows paying super contributions on paid parental leave will have a strong impact on retirement savings. The modelling revealed the policy change could mean as much as 4.5 per cent in additional super savings for an early childhood educator with three children, or 2.6 per cent more for an aged care professional with two children, significant amounts for women on lower incomes.
HESTA CEO Debby Blakey said paying super on paid parent leave payments is an important equity measure that could make a real difference for women. More than 80 per cent of HESTA’s 950,000-strong membership base are women with many earning low and middle income.
“Every extra dollar our members can add to their super can really make a difference when they retire,” Blakey said. “This policy change will give women’s retirement savings a much-needed boost, helping to close the gender super gap, as women are currently much more likely to be the ones taking parental leave.”
A HESTA survey of more than 2,300 members earlier this year found nine in 10 strongly agreed that changes to Australia’s superannuation system were needed to improve women’s financial security in retirement. An overwhelming 85 per cent of members surveyed supported the move to pay super during parental leave, increasing to 91 per cent for those under 35 years.
Campaign for change
Industry groups have been leading a campaign for the government to change the current policy, arguing it would lead to more equitable retirement outcomes for Australians. Particularly for women who tended to shoulder the burden of child rearing responsibilities and were often on lower salaries compared to their male colleagues in similar roles.
“No one policy change will close the gender super gap but paying super on paid parental leave is a critical element that must be legislated to ensure we do not condemn future generations of Australian women to a retirement in poverty,” said Jo Kowalczyk, chief executive of industry association Women in Super.
|A typical HESTA member in:||Potential increase in super balance at retirement from having:|
|One child||Two children||Three children|
|Early Childhood Education & Care||1.4%||2.8%||4.5%|