Industry funds call for federal government to pay superannuation on parental leave payments

One of the nation’s largest industry fund bodies has slammed the Morrison government for failing to provide superannuation on paid parental leave, which disproportionately affects women.

Industry Super Australia claims no super on paid parental leave offered by the federal government has cost working mums upwards of $1.6bn in lost contributions over the past decade.

The Commonwealth Parental Leave Pay, which is provided to government workers, does not include the superannuation guarantee, with only a number of firms in the private sector committing to equitable paid parental schemes were SG payments are ongoing.

ISA at a forum it hosted on Friday, said the lack of super on the Commonwealth program is costing the average mother of two approximately $14,000 at retirement.

ISA director Georgia Brumby said the lack of super on parental support schemes is impacting working women and exacerbating income inequality between the genders.

“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,” Ms Brumby said.

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

Minister for superannuation Jane Hume said changes to paid parental leave to make it more flexible have already occurred, but further changes would be “remiss” while the pandemic disrupts normal working conditions.

“The Morrison Government made reforms to the paid parental leave scheme in 2020 to enhance its flexibility and allow Australian families to choose how to use parental leave between primary and secondary carers,” Senator Hume said.

“Given the disruptions to Australia’s workforce due to COVID-19, we have not seen the full impact of these reforms since they were proclaimed. It would be remiss of this Government to make further changes without proper consideration of the changes already made.

“The Morrison Government made reforms to the paid parental leave scheme in 2020 to enhance its flexibility and allow Australian families to choose how to use parental leave between primary and secondary carers.

“Given the disruptions to Australia’s workforce due to COVID-19, we have not seen the full impact of these reforms since they were proclaimed. It would be remiss of this Government to make further changes without proper consideration of the changes already made.”

In the past 10 years, 1.45 million women have received income through the Commonwealth Parental Leave Pay scheme and 99.5 per cent of applications have been from women.

For financial year 2020, women on the scheme missed out on $216.7m lost super payments.

Data provided to The Canberra Times, shows Canberrans in the three electorates of the ACT have lost $36.7m over the past decade, with $36.3m attributed to lost contributions from women.

Former Workplace Gender Equality Agency director Libby Lyons who spoke at the ISA event said, the lack of bridging the gender wealth gap was a “national disgrace”.

“In a country like ours where we have great wealth to share, where we have so many opportunities, we are seeing women still retire with up to 40 per cent less superannuation than men. It is a national disgrace,” Ms Lyons said.

“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.

“This is having a detrimental financial impact on families, especially women, and is impeding our country’s economic growth.”

Jacob Vargelese from Maurice Blackburn lawyers said stigma around men taking parental leave to support their family needs to be ditched.

LIberal Senator Jane Hume, who is the minister for superannuation has been contacted for comment in relation to the Commonwealth parental scheme.

Members of ISA include AustralianSuper, Hesta, Cbus and Hostplus.

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