In a significant move towards promoting financial equity and supporting working parents, legislative changes surrounding superannuation contributions during parental leave have commenced. The government will pay superannuation guarantee equivalent payments on government-funded parental leave. These changes came into effect on 1 July 2025 and aim to address the long-standing issue of superannuation gaps that disproportionately affect women, who are more likely to take extended periods of parental leave.
The superannuation gap
Historically, parental leave has been a period where superannuation contributions are either reduced or completely halted. This has led to a significant disparity in retirement savings, particularly for women, who often take on the primary caregiving role. According to recent studies, women retire with approximately 20-30% less superannuation than men1, largely due to career interruptions for caregiving responsibilities.
The legislative changes
From 1 July 2025, eligible parents will receive superannuation contributions equivalent to 12% of their government-funded parental leave payment2. Once the scheme reaches the maximum payment period, a family would receive more than $3,000 in superannuation contributions for each birth or adoption. If you share parental leave with another person, each person is eligible for a superannuation contribution on their share of the payment.
The superannuation contributions, including any interest component, will be paid as a lump sum to your superannuation fund by the Australian Taxation Office (ATO). These contributions will be paid after the end of the financial year in which the parental leave pay was received. The superannuation contribution is automatic and you don't need to do anything. The first contribution payments will commence from July 2026.
Paid parental leave falls into two categories: government-funded paid parental leave, or employer-funded paid parental leave. If eligible, employees could receive both types of payments, including both superannuation payments. Employers will have their own policies when it comes to parental leave and the available benefits will depend on the employee's agreement/contract. So, while some employers offer paid parental leave and pay superannuation on top of that, the new laws ensure parents using government-funded paid parental leave will be able to have the same benefit.
Looking ahead
As these policies gain momentum, they represent a critical shift towards recognising the value of caregiving and addressing systemic inequalities in retirement savings. By supporting employees during parental leave, Australia is taking a meaningful step towards a more equitable and financially secure future for all. This initiative not only benefits individuals but also strengthens the broader economy by reducing reliance on government support in retirement. It's a win-win for employees, employers and society.
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Sources
1 2024 Status of Women Report Card, Australian Government, Gender Equality, accessed 10 Nov 2025
2 Changes if you get family payments, Services Australia, 9 Sept 2025
