why is it so important to receive super while on parental leave

This month, with her return to the world of tennis and reaching the Wimbledon final after having her daughter ten months ago, Serena Williams and her husband Alexis Ohanian have pushed the issue of paid parental leave into the global spotlight – a topic that is tightly knitted to Women in Super’s Make Super Fair Campaign.

Ohanian, a highly successful and influential entrepreneur and co-founder of Reddit and capital venture firm Initialized, has become an avid advocate for fully paid parental leave in the US. In an opinion piece for the renowned American political website, The Hill, Ohanian is urging US politicians of all parties to commit to passing a robust paid family leave policy. Currently 94% of low wage Americans – mostly women – do not qualify for a single day of paid parental leave.

“This leave time should also be flexible to allow our people to take care of their families when they need them. Every family is different, and paid leave should be customized for their specific needs,” Ohanian writes, emphasising that the leave should be available for men and women, since “the more men who step up to take parental leave, the better for both our families and for all women in the workforce.”

Australia introduced paid parental leave in Australia in 2011 and so can claim to be more progressive than the US in this area. The Australian government Paid Parental Leave Scheme ensures that eligible working parents (usually mothers) receive up to 18 weeks of pay at the rate of the national minimum wage.

However, does that mean Australia has done enough in that regard? The answer must be no. In particular, when it comes to superannuation. The Paid Parental Leave Scheme does not attract the Superannuation Guarantee. This means that it is not compulsory for any employer to pay superannuation while a new parent (mostly the mother) is on paid parental leave.

The consequence? The accumulation of superannuation savings is interrupted while being on paid parental leave which is commonly extended by several months of unpaid parental leave. In combination with the current Australian gender pay gap of 19% on average, and the fact that mothers usually return to work part-time after having children, this is one of the major factors contributing to the current situation where Australian women retire on average with 47% less super than men.

Women in Super, therefore, advocates for compulsory payment of superannuation for parents on parental leave. We believe that it is essential to include Superannuation Guarantee payments in this scheme, as recommended by the Productivity Commission, so that all parents, especially mothers, can continue to grow their superannuation while on parental leave.

This is even more crucial since – as mentioned above – women will commonly re-join the workforce on a part-time basis after their parental leave. As a result, their superannuation earnings will be lower because they earn less: according to data collected by the Workplace Gender Equality Agency (WGEA) even the annualised base salary for part-time employment of $54,154 is less when compared to a $84,851 full-time average base salary. 

Part-time employment is also less likely to be available in senior management roles, in fact, availability is estimated to be less than 10%. This low percentage of part-time employment in management limits women’s capacities to take up or stay in senior leadership roles if they are a carer, highlights WGEA. The agency also provides data showing that the gender pay gap is more significant in part-time than in full-time positions, contributing further to lower superannuation in general.

Consequently, WGEA concludes: “This means that the current superannuation system in Australia, which is tied to paid work, creates significant inequalities in retirement incomes for those who provide unpaid care.”

“This is more than just about doing the right thing — it’s a smart business decision. We employ humans, not robots, and if you’re expecting them to do great work, they need to be in a healthy state of mind,” writes Alexis Ohanian referring to his mission of making paid parental leave in the US compulsory.

One of the five policy points that make up Women in Super's Make Super Fair campaign is the introduction of compulsory superannuation payments for parents on parental leave. Receiving these additional superannuation payments will help reduce the risk of living in poverty at retirement – a fate which a growing cohort of Australian women are facing. For the majority of women, knowing that they can improve their retirement outcomes will contribute to a much healthier state of mind when doing what many want and feel they have to do: care for their family.

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