Starting 1 July 2025, new parents will be eligible to receive superannuation contributions on top of their government-funded paid parental leave (PPL). This change aims to boost retirement savings, particularly for women, and support families during the critical period of early parenthood.
What’s Changing?
Eligible parents with babies born or adopted from 1 July 2025 will receive an additional 12% of their government-funded PPL as a superannuation contribution to their chosen superannuation fund. The ATO will pay this lump sum annually after each financial year, along with an interest component to account for the delay.
Eligibility Criteria
Parents must meet the following requirements to qualify:
- Have a newborn or recently adopted child.
- Meet specific income, work, and residency requirements.
- Not be working during the PPL period, except for allowable reasons.
- Register the child’s birth with the relevant state or territory registry if the child is a newborn.
Starting from 1 July 2025, government-funded PPL will increase from the current 22 weeks to 24 weeks, with an additional increase to 26 weeks by 1 July 2026. Applications for PPL remain available through Services Australia, which will assess eligibility for the payment and the superannuation contribution.
Government-Funded vs. Employer-Funded PPL
PPL can be either government-funded or employer-funded, and eligible employees may qualify for both. While employers are not required to provide superannuation on PPL, many choose to do so, often with specific service requirements and varied terms. However, the new law ensures that parents utilizing government-funded PPL will receive super contributions, promoting more equitable retirement savings.
How This Benefits Families
Currently, superannuation is not paid on government-funded PPL, which has contributed to a gap in retirement savings, especially for women. With this new law, parents will receive super contributions for the time they are on parental leave, helping to close the retirement savings gap and improve financial security in later life.