Paying super on paid parental leave could be key to tackling retirement inequity for women and closing the gender super gap.
Backing the intention for super to be paid on Commonwealth Paid Parental Leave is HESTA, the superannuation fund that’s just come out with new modelling revealing the impact this reform could have on its members’ retirement earnings.
HESTA is the largest superannuation fund dedicated to Australia’s health and community services sector, and more than 80 per cent of their membership are women, with many being low and middle-income earners
A typical member of HESTA works in caring professions such as early childhood education & care, aged care, community services and primary health. Their data found that policy change could mean that for an aged care worker with two children, super would increase by 2.6 per cent and for an early childhood educator with three children, it could increase by 4.5%.
“Every extra dollar our members can add to their super can really make a difference when they retire,” says Debby Blakey, CEO of HESTA.
“Many HESTA members have lower account balances as they often work in casual, part-time or insecure work or in industries that are typically lower paid, like aged care and early childhood education. Achieving adequate super savings is then harder as they’ll often also need to take long periods of unpaid time out of the workforce to care for others.”
There’s a growing coalition of organisations from the business, health, aged care and community services sectors who are advocating for paid super on parental leave alongside HESTA, including Chief Executive Women, Early Childhood Education Australia and the Australian Nursing and Midwifery Federation.
“Parental leave continues to be one of the few types of leave yet to attract superannuation. Extending the superannuation guarantee to paid parental leave is a critical lever for closing the gender gap in superannuation and improving women’s economic security across their lifetime,” says Pauline Vamos, Chief Executive Women’s Non-Executive Director, Chair Policy and Engagement Committee.
This policy change is also backed by HESTA’s members according to a survey that shows, regardless of gender, 85 per cent support it– that number grows to 91 per cent for those under 35.
Earlier this year, more HESTA data showed that 9 out of 10 of the 2300 members surveyed strongly agreed that changes to Australia’s super system were needed to improve women’s financial security in retirement.
“Women continue to be financially disadvantaged throughout their careers, especially when they take parental and carer’s leave, and then when they retire with reduced superannuation earnings,” says Australian Nursing and Midwifery Federation’s Federal Secretary, Annie Butler. “Providing women with super payments during parental leave is a common-sense solution in working to address the gender pay gap and securing their future.”
HESTA has found that paying super on parental leave could result in a mother of two having $14,000 more at retirement.
Parental leave is the only commonly taken paid leave that doesn’t include superannuation and Blakey says this sends a clear message that caring work is undervalued.
“Our members have told us paying super on paid parental leave is incredibly important to them and that they want to see this long standing inequity changed so our retirement system is fairer to all Australians.”