Australia Passes Law To Extend Superannuation To New Parents From July 2025

The Australian Parliament has enacted legislation to extend superannuation contributions to new parents who receive government-funded parental pay -- a landmark initiative designed to bridge the gender gap in retirement savings.

As the Senate passed the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Bill 2024 on Thursday, parents with babies born or adopted on or after July 1, 2025, will receive an additional payment, based on the Superannuation Guarantee (12% of their Paid Parental Leave payment), as a contribution to their nominated superannuation fund.

The superannuation payment is expected to cost AU$1.1 billion in the budget over the next four years.

The reform was expected to improve the retirement benefits of 180,000 Australian families each year, according to Minister for Social Services Amanda Rishworth.

"We know women retire with 25 per cent less superannuation than men – an estimated $51,700 less on average. By investing in these reforms, we are ensuring families can get the most of Paid Parental Leave, exercise more choice and flexibility and have a more secure retirement," she said. "Investing $1.1 billion over the forward estimates to pay superannuation on Paid Parental Leave is a key step in prioritizing gender equality as most recipients are women who will have lower superannuation balances. The measure will directly reduce the impact of parental leave on retirement incomes."

Now, couples can choose up to 22 weeks of paid parental leave (PPL) at the national minimum wage of AU$915.90 a week, ABC News reported.

Under the new scheme, it will increase to 24 weeks for children born or adopted after July 1 next year, and to 26 weeks in 2026.

The changes were adopted based on the recommendations by the Women's Economic Equality Taskforce on how to improve the financial status of women. Its report had asked the government to pay superannuation on "all forms" of PPL.

"We know that when women take time out of the workforce to have children, they take a hit to their super balances, retiring with 25 per cent less super than men," Minister for Women Katy Gallagher said. "This is an important statement about the value that we place on parents taking time out of the paid workforce to care for the next generations— because you shouldn't have to sacrifice your future financial security to care for your babies."

Starting in 2026, Australians will be entitled for a full six months of Commonwealth-funded paid parental leave; however, the government was being urged to increase this benefit to 52 weeks.