Starting from July 1, 2025, Australian parents taking paid parental leave will see superannuation contributions made on the government’s parental leave payments. This change means that eligible parents could receive an additional $3,000 added to their retirement savings, a change that could have significant long-term benefits.
The new policy comes as part of the Australian government’s broader efforts to improve the financial well-being of families, particularly by addressing the growing superannuation gap between men and women. By ensuring that parents receive super contributions during parental leave, the government aims to provide better retirement outcomes for those taking time off to care for newborns or newly adopted children.
How the New Superannuation Boost Will Work
Under the new scheme, superannuation will be paid on paid parental leave based on a 12% contribution, in line with guarantee rate. For parents receiving the government’s paid parental leave, this means that their balances will be boosted by a contribution of 12% of the leave payments.
For example, under the minimum wage, parents will see an additional $3,000 credited to their accounts. According to Melinda Brown, senior private client adviser at UniSuper, this contribution, when compounded over many years, will make a “huge difference” to retirement balances.
“This is particularly important as women typically retire with 25% less superannuation than men,” Brown said. This policy change is expected to help bridge the gap by adding to retirement savings while parents are on leave.
The Increase in Paid Parental Leave
Along with the superannuation boost, paid parental leave itself is also set to increase. As of July 1, 2025, the duration of the paid leave will extend from 22 weeks to 24 weeks, and it will further increase to 26 weeks by July 1, 2026. This increase aims to support parents as they balance the challenges of caring for newborns or adopted children while continuing to support their families.
The paid parental leave is based on the minimum wage, which will rise by 3.5% to $24.95 per hour or $948 per week as of July 1. This wage increase, along with the superannuation contribution, will provide a substantial financial boost to families at a crucial time in their lives.
$3,000 superannuation boost coming for Aussie parents from July 1: 'Huge difference' https://t.co/Eakx1OW0FS
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Who Will Benefit from the Change?
The changes are expected to benefit around 180,000 Australian families every year. This shift applies to parents with babies born or adopted after July 1, 2025, and those eligible for the government’s paid parental leave will receive the superannuation contribution directly into their super fund.
For parents who choose to share their parental leave, the super contribution will be divided between them based on how many days each parent takes. This ensures that both parents have their superannuation boosted, depending on how much leave they take.
Other Considerations for Parents
Parents planning for parental leave should consider taking proactive steps to safeguard their superannuation. It is essential to check the insurance coverage linked to their super accounts, as some funds may lose coverage if no contributions have been made for over 16 months. If necessary, parents can elect to maintain their insurance coverage during the leave period.
In addition, voluntary contributions during parental leave can be an effective strategy for growing superannuation, as can making spouse contributions or splitting contributions between partners. “At the end of each financial year, you can split the super contributions received from the employer,” Brown explained.
Parents should also consider consolidating their super accounts to reduce fees and streamline their retirement savings. The myGov platform offers an easy way to manage and consolidate multiple accounts.
Lastly, it is worth reviewing the investment mix within the superannuation fund and seeking professional financial advice tailored to their personal circumstances. Many super funds now offer limited financial advice at no extra cost, providing parents with a valuable resource for optimizing their super strategy during this period of change.