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Hewison Private Wealth - Insights
Hewison Insights

Paid Parental Leave Superannuation Contributions

Alexi Guagas
Senior Associate Adviser
20 Mar 2024

From 1 July 2025, superannuation will be paid to parents who meet the eligibility requirements for the government-funded Paid Parental Leave (PPL) scheme. These changes mark a significant step towards acknowledging the importance of caring for a child, viewing it as a job with workforce rights and a step closer to closing the superannuation gap for primary carers.

One of the challenges faced by parents on PPL was the impact on their superannuation benefits. While they were receiving payments during their time away from work, superannuation contributions were not typically made, leading to a potential gap in retirement savings. Recognising this issue, the Australian Government will introduce new measures to address this gap and provide greater support to parents on the PPL scheme.

Under the new changes, the Australian government will contribute superannuation for parents on the PPL from 1 July 2025. By ensuring that superannuation contributions are made during this period, the government is helping to safeguard the long-term financial security of parents, which further promotes greater equality in superannuation savings.

These changes are particularly beneficial for women, who more commonly take PPL periods. Women are often at the height of their careers when having children, resulting in a progression pause, and lower superannuation balances due to their period out of the workforce. By maintaining regular superannuation contributions during the PPL, the Australian Government is taking a welcomed and overdue step towards closing the gender superannuation gap and promoting financial equality for all parents.

Overall, the changes announced by the Australian Government to superannuation contributions for the PPL have been long overdue and are a positive development that will benefit working parents across the country.

By ensuring that superannuation savings continue to grow during periods of parental leave, the government is helping to create a more secure and equitable financial future for families.

There are other ways secondary carers can support the growth of the primary carer’s superannuation during this period, through spousal contributions – but this is a topic for another day. It’s important to stay informed about changes and understand how they may impact your financial situation. By making informed decisions about your superannuation savings, you can set yourself up for a more financially secure future, both for yourself and your family.

Here’s to a brighter and more financially inclusive future for all parents in Australia.