Super sting costs NSW mums $500 million

NSW mothers have missed out on more than $522 million in superannuation contributions because the government refuses to pay super on its parental leave scheme. 

Industry Super Australia analysis shows more than 467,000 NSW mothers have received Commonwealth Parental Leave Pay in the last 10 years.

But without getting paid super these mothers were being made to sacrifice their retirement savings leaving them significantly worse off.

The hidden super sting could cost a mother of two $14,000 from their final retirement savings.

Overwhelmingly it is women that are missing out, 99.5% of the state’s Commonwealth Parental Leave Pay applicants were women and just 0.5% men.

In the 2019-20 financial year 54,440 NSW women missed out on almost $70 million in super contributions.

Women in the electorate of Greenway in Sydney’s west lost the most in the state – up to 14,200 mums missed out on $15.9 million in super payments (see table 1).

Parental Leave is one of the only types of paid leave that there is no requirement to pay super and the government does not pay the super guarantee on its scheme. So, unless an employer voluntarily pays super on leave, working mother’s savings fall further behind.

The modest payment of super linked to the Commonwealth’s 18-week paid parental leave scheme – paid at minimum wage and available to most working mothers – is an important equity measure to ensure women’s savings keep pace.

Missing years of super payments has a dramatic impact on a woman’s final balance. A woman who spends five years out of the paid workforce in their late 20s and early 30s could be almost $100,000 worse off.

NSW women of all ages have less super than men, but the gap widens dramatically when women are in their 30s, when many take time out of the workforce to raise children.

The typical NSW woman nearing retirement has $60,000 less in super than the typical man, the NSW gender super gap at retirement is 30%.

Government forecasts shows the gender super gap will span the next four decades at least, unless action is taken – paying super on parental leave is an important step towards bridging the gap.

One in three women retire with no super balance at all, according to a 2016 Senate report.

Industry Super Australia Advocacy Director Georgia Brumby said NSW women are being made to sacrifice their retirement savings to have children.

“It’s hard enough trying to juggle work and raising a family – it’s not fair that thousands of women are also missing out on thousands from their super as well.”

“The Prime Minister should take the opportunity to fix this glaring inequity and make a positive step towards ending the gender super gap – otherwise we will continue to see too many women at risk of retiring into poverty.”

Table 1: NSW Commonwealth Parental Leave Pay applicants January 2011 to June 2020