Women missed out on $216.7 million in (not so) super 2019/2020

Bad news for parents on International Women’s Day 2022 as it has been revealed that superannuation will not be added to the Commonwealth’s parental leave pay.

Superannuation will not be added to the Commonwealth’s parental leave pay, it was revealed today.

Ministers were considering the measure as they looked at options to better support women’s economic security but ultimately rejected the plan.

According to a new International Women’s Day Report launched by Finder, the average woman would have to supplement an extra $236 per month into her super or work an extra 11 years to retire with the same super balance as men.

Around 171,00 women missed out on $216.7 million in super payments in the 2019/20 financial year alone.

Taking just one year of parental leave from full-time work will cost the average female $16,800 in lost super.

If the mother chooses to work a four-day week for the first two years of the child’s life, that figure increases to $39,500 in lost super.

On average, men retire with 26% more super than women according to the Association of Superannuation Funds of Australia.

Women (80%) are less likely than men (87%) to be aware that they can make additional super contributions, and they are half as likely (13%) as men (27%) to do so regularly.

Alison Banney, money expert at Finder, says “It’s a shame to see that the government has decided not to include super in the Commonwealth’s parental leave policy. Many Australian women will be worse off in retirement as a result.”

While primary carers can access up to 18 weeks of paid parental leave from the government, and up to 12 months of unpaid paid parental leave, employers aren’t required to pay super during this time.

“Many women take up to a year or more off work, which can have an exponential impact on long-term super,” continues Alison. “It’s a huge number of Aussie women who are impacted and may force some to choose between motherhood and the workforce.”

4 small steps to financial security in retirement:

1. Make monthly contributions: One in six Australians (17%) are not aware you can make extra super contributions, and only 20% do so regularly.
2. Supplement your super: You can supplement your super with up to 25% of your annual income to help save for retirement, and it reduces the income tax you pay
3. Top up your partner’s super: Only 8% of men have contributed to their partner’s super, and 10% didn’t know this was an option. This is a great way to reduce the gender super gap and help out your partner if they take maternity leave.
4. Consolidate your funds: More than one-quarter (26%) of Australians with superannuation have more than one account. This can make it difficult to grow your balance, because multiple smaller balances do not compound as well as one consolidated balance, and paying several sets of account fees will eat into your returns.