This is great news for many women, as it creates an opportunity for them to boost their retirement savings and help narrow the superannuation gender gap.
But it’s only for women who manage to secure work with a more progressive company when it comes to employer benefits.
That means we’ll continue to have a superannuation system where too many Australian women are missing out.
Under existing federal legislation, employers are not required to make superannuation contributions for employees on paid parental leave (PPL).
This overwhelmingly affects the accumulation of superannuation for women, and accentuates the gender savings gap in super, which currently sees women retiring with about 30 per cent less than men.
Industry super fund NGS Super, which has about 70 per cent women as members, is the latest financial services company to approve superannuation payments on parental leave for both female and male employees, up to a period of 12 months.
“We see it as important way to attract and retain good staff. It’s just part of the employee benefits package,” Laura Wright, acting chief executive officer of NGS Super, told Women’s Agenda.
Wright says more Australian companies are likely to offer superannuation payments during parental leave in the years ahead, even if the government doesn’t make it compulsory.
“If you are calling on governments and business to do more to help women narrow the superannuation savings gap then it’s good if you can also lead by example.
“We want to do that and we think it is something that employers will increasingly do,” she says.
“If a woman takes the company’s 12 weeks paid parental leave, we (NGS) will also pay 12 per cent super, but some companies are paying even more than that too.”
Earlier this year HSBC Australia joined the likes of the big four banks, Commonwealth Bank of Australia, ANZ, NAB and Westpac, which pay their employees super for a period of up to two years of parental leave.
The country’s biggest super fund, AustralianSuper, also makes super payments at the full-time rate for up to a period of two years while a person is on unpaid parental leave.
And it’s not just the financial services sector, but many corporates in media, energy and property are now offering similar benefits on parental leave to help narrow the super gender gap.
The Workplace Gender Equality Agency (WGEA) recently commended energy company Viva Energy and property group Dexus for their commitments to pay superannuation contributions throughout parental leave periods.
Many of these companies, like NGS, are paying more than the compulsory rate of Superannuation Guarantee (SG) contribution, which is currently 9.5 per cent.
Based on revised laws, the SG rate will remain at 9.5 per cent for another 3 years until 30 June 2021, and will gradually increase to 12 per cent from July 2025.
According to the Financy Women’s Index, the superannuation savings gap between men and women has marginally improved in recent years.
The most recent data available from the Australian Bureau of Statistics (ABS) shows that the gender gap narrowed by 6 percentage points in the 2016 financial year, and means that the average woman has about 27 per cent less in her retirement savings than men.
While it’s likely the superannuation savings gap could narrow as a result of more companies paying super benefits on parental leave, there is a risk that this could mask the extent of the problem affecting the women who are missing out.
What’s needed is a government willing to make superannuation payments a compulsory part of parental leave regardless of gender.