Why it is time to pay superannuation on all parental leave

Why it is time to pay superannuation on all parental leave

A friend of mine, let’s call her Sally, was about to go on parental leave and was confused about why she wasn’t going to be paid superannuation while caring for her first child. 

I wasn’t surprised at her confusion, because this is a situation that is completely unfair. 

We pay superannuation when employees go on sick leave. We pay superannuation when workers go on annual and on long-service leave. 

There is only one type of leave that more often than not, does not attract superannuation and that’s parental leave. 

Sadly for Sally she misses out – and that isn’t fair.  

Is it because we don’t value the work of parents who care for their children? Or it is simply the case that that this is the way it always has been and we’re still yet to catch onto the fact that women make up half the workforce (and the population while we’re at it). 

Let’s call it what it is, a parental tax because it is penalising women and men for having children. And it’s one of those inequalities in the system that leads to women persistently retiring with far less than men. 

According to Industry Super figures, by the time women retire, they have a median balance of $147,000, compared to men who have $204,000 in super. Those figures also confirm that women’s child-bearing years are when the super gap really opens for women. 

One of the many negatives of the pandemic has been a widening of the gender pay gap due to female-dominated industries being worst hit, and women often being in casualised work. Of course, as the pay gap widens so does the gender super gap and is one of the reasons older women are the fastest growing group of people experiencing homelessness in Australia.  

Disturbingly, Treasury’s Intergenerational Report found there would still be a gender super gap in more than four decades. 

How long can we continue expecting parents to sacrifice their retirement savings to raise children, or is it time to mandate that super is paid on employer parental leave and show women in particular that they are valued and seen as equal in the workplace? 

Some business and organisations, such as Bass Coast Shire Council, have recently voluntarily introduced paid superannuation on all parental leave to attract and retain talented employees and encourage men to take time off, which in turn gives mothers more scope to do paid work. The Victorian Public Service Enterprise Bargaining Agreement sees staff get superannuation on paid and unpaid parental leave up to 12 months, anyone who misses out on a pay increment during their parental leave can apply for a double increment when they return, and parental leave can be split between parents. The Australian Retailers’ Association has thrown its weight behind the fight too. 

Australia’s retirement income system is regularly cited as among the world’s best. But best for who? 

The superannuation system is systematically biased against half the population, found a report by the Australian Services Union and PerCapita.  

The report nailed the reasons: “Superannuation was designed around a model of employment that is rapidly disappearing. In this model, household income was provided by one breadwinner, usually a man, via a job that was full-time and dependable. Implicitly, the benefits of superannuation would largely flow to women through their male partners. What’s happened since is that many more women have entered the workforce to earn and save independently, but the nature of work available to them has been more intermittent and lower paid than that of their male counterparts. This combined with the fact that women still do the overwhelming majority of unpaid housework, caring and parenting, means that the benefits of super, which move in direct proportion to pay, have not flowed to female recipients as hoped.’’  

The super system is exacerbating the imbalance in retirement incomes because women’s work trajectories are different from the continuous, linear, upward financial trajectory that superannuation expectations and projections have been built on.  

Women and men are already voting with their feet and seeking out organisations that value employees and reward them with flexible and generous parental leave

I hope that we’ll look back in years to come at the decision not to extend paid superannuation to parental leave as one of those anachronisms of the bygone era. 

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