Super on paid parental leave

The Government has announced that superannuation will be paid on government-funded Paid Parental Leave (PPL) scheme for births and adoptions on or after 1 July 2025.

This will benefit around 180,000 families annually by helping boost retirement savings for parents, particularly women who take time out of the workforce to have children.

Key Points

  • Eligible parents with babies born or adopted from July 2025 will receive an extra 12% of their government-funded paid parental leave as a superannuation contribution to their fund. This is in line with the compulsory 12% superannuation contribution rate that will apply from July 2025.
  • For a typical parent taking 18 weeks of paid parental leave, this is estimated to add around $6,500 per child to their retirement savings.
  • The change addresses a long-standing inequity, as 99.5% of Commonwealth Paid Parental Leave recipients are women. Taking time out of work to have children contributes to the gender retirement savings gap, with women retiring with around 25% less superannuation than men on average.
  • The policy has been welcomed by unions and advocacy groups who have campaigned for over a decade to have superannuation paid on government parental leave payments. It is seen as a significant step towards achieving gender equality in retirement incomes.

The government states that paying super on parental leave will help value the substantial contribution of unpaid care work to the economy and progress towards greater workplace equality.

How to claim superannuation on paid parental leave

The government will automatically pay the superannuation guarantee contribution on the Paid Parental Leave payment to the employee’s superannuation fund from July 1, 2025. Employers do not need to take any specific action or update superannuation details for their employees receiving Paid Parental Leave.

  • Employers are not required to make any superannuation contributions themselves for Paid Parental Leave payments. The government will handle paying the super contribution directly.
  • There is no need for employers to claim, apply for or update any superannuation details related to the Paid Parental Leave super payments.
  • The government will calculate and pay the 12% super contribution automatically based on the Paid Parental Leave payment amount, using existing superannuation fund details for the employee.
  • Employers will continue to provide just the Paid Parental Leave payment to their eligible employees as usual, following the existing process.

So in summary, from 1 July 2025, eligible employees receiving the government’s Paid Parental Leave will automatically have the equivalent 12% superannuation contributed to their super fund by the government, with no additional requirements or updates needed from employers regarding superannuation details. 

Contact us today if you need assistance with super contributions.

About our advisers

Michael Fox has been dedicated to the success of his clients, devising comprehensive wealth strategies for both personal and business growth for over 4 decades. With extensive expertise in business governance and family business succession, Michael specialises in empowering emerging businesses and family enterprises by fostering renewal, enhancing value and smooth transitions to the next generation. Please do not hesitate to reach out if you need assistance.

Chrisanthe Lekatis is renowned for her expertise in management accounting, virtual CFO services, and top-tier business advice. She empowers management with tailored strategies for success, streamlining processes to achieve efficient and cost-effective outcomes. Her commitment to building trust and lasting relationships goes beyond professional excellence; it’s a personal ethos. By actively listening and understanding her clients’ businesses and goals, Chrisanthe thrives on collaborative efforts to navigate challenges and collectively achieve their aspirations. Please do not hesitate to reach out if you need assistance.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or get professional advice from a qualified accountant or financial adviser at KMT Partners.