Government to pay super on PPL payments from 1 July 2025

In September, the Government successfully negotiated passage of its Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Bill 2024 through both Houses of Parliament, receiving assent on 1 October 2024. The legislation will facilitate the Government making superannuation contributions for people receiving paid parental leave (PPL) in respect of children born on or after 1 July 2025.

Earlier in the year, Social Services Minister, Amanda Rishworth, said the legislation was designed, in part, to address the “motherhood penalty” that erodes women’s economic security because they take time out of the workforce to have children. Minister Rishworth further observed that women retire with about 25% less super than men, meaning that the payment of super on PPL payments “is an important step to reducing the gendered gaps in retirement savings”.

The legislation provides for super contributions – which will be calculated at the rate of 12%, from 1 July 2025 – on PPL to be paid annually to the ATO, at the end of each financial year, along with an interest component to recognise foregone earning had it been in a super fund. The Government’s figures indicate that, once the PPL entitlement reaches 26 weeks in 2026, eligible parents will receive up to $3,000 in super contributions generated on the PPL benefit.

As a result of the Bill passing, a “minor technical amendment” has also been made in relation to unpaid parental leave within the National Employment Standards (NES), to correct an inconsistency with respect to keeping in touch days utilised after a period of flexible unpaid parental leave has been taken. This discrete amendment is limited to the replacement of subsection 79A(5) of the NES.