What’s happening?
The Labor Government has made a significant announcement regarding the Paid Parental Leave scheme, noting they’ll now pay superannuation on the Government payment from 1 July 2025
This reform is noted as an investment in woman’s economic security, as it helps to build and protect woman’s retirement savings as they take time off to raise their families.
Paying super on Government PPL will help normalise parental leave as a workplace entitlement, like annual and sick leave, and reduce the impact of parental leave on retirement incomes.
The Government is also looking to alter the PPL by expanding the payment to a full six months by 2026. This increase in weeks is currently in front of the Senate, and if passed, will see families have access to an extra two weeks of leave (22 weeks in total), which will increase to 24 weeks from July 2025 and finally to 26 weeks from July 2026. A massive win for families around Australia.
Our thoughts?
This can be viewed as only a good thing. Woman often take many years out of the workforce to raise their families, so this has a huge impact on their retirement saving ability.
Paying super on PPL will continue to grow woman’s retirement balances while they take time off to raise their families.
An important message to young woman is if you’re planning on having a family, start early to build your retirement nest egg. Consider taking advantage of strategies to build your balance while you’re earning a full time wage. You could consider salary sacrifice contributions and/or spouse contribution.
If you would like to discuss how to build your superannuation effectively, contact us here for an appointment.
