What happens to super when you take parental leave?

Preparing for parental leave? While there’s lots to think about, don’t forget about your super. Here are some things you should know about how super works when you go on parental leave.

Welcoming a new baby is exciting, but it can also bring complex decisions around parental leave and superannuation. It can feel overwhelming - but it's normal and you're not alone.

While understanding the law is one part of it, knowing what's best for you and your growing family is also important.

We’re here to help you demystify the world of super and parental leave, so you can focus on what really matters—embracing the beautiful journey of parenthood.

In this article, you can learn about:

• Is super paid on parental leave?
• What are the types of paid parental leave?
• Tips to getting super on track before taking parental leave

Is super paid on parental leave?

By law, employers aren’t required to pay super on parental leave, regardless of whether the leave is funded by the government or employer. However, some employers choose to pay super during parental leave, even if it's not mandatory.

If you’re a parent-to-be, there is good news. According to a report by the Workplace Gender Equality Agency (WGEA) in 2022-23¹,

• 86% of employers who offer paid parental leave also pay super on parental leave
• 14% provide super on government-funded parental leave
• 13% do so on unpaid parental leave.

This means that many employers understand the importance of supporting parents' long-term financial security by contributing to their super, even when not legally required.

However, every situation can be different. Whether you'll receive super contributions during parental leave generally depends on your specific employer and what’s written in your employment contract. It's a good idea to find out what your employer's policy is and what your rights and entitlements are.

1. WGEA Gender Equality Scorecard 2022-23, Workplace Gender Equality Agency (WGEA)

How does taking parental leave affect your super?

For many, there’s no guarantee of super payments during parental leave. That’s why it's essential to think about the impact it can have on your super savings (especially for women, who account for 88% of all used primary carer’s leave¹). Taking time off work for parental leave can affect how much super you'll have in the future. So, it's important to consider these factors when planning for your financial future.

Remember, staying up to date on your entitlements and making informed decisions can help you protect and grow your super savings while enjoying the precious time with your new family member.

What are the types of paid parental leave?

There are two main types of paid parental leave: government-funded and employer-funded.

Importantly, it's possible to benefit from both types of leave as receiving one generally doesn’t affect your eligibility for the other (if your employer offers its own paid parental leave).

Government-funded paid parental leave

The Australian government provides some financial support for new parents. As the information listed is just a guide, follow the links to the relevant Services Australia pages for more details.

How much is government-funded paid parental leave?

The Parental Leave Pay and the Dad and Partner Pay are paid at the national minimum wage, which is $882.75 per week (or $23.23 an hour).

The government’s scheme offers some much-needed financial support for parents-to-be. It's important to point out though that in most cases, it’s likely that you’ll earn less during parental leave than when you were in paid employment, given the government scheme is based on the minimum wage. Everyone’s situation is different, so you may want to run the numbers or speak with a financial adviser for more details on your own circumstances.

Employer-funded paid parental leave

Beyond government support, some employers offer their own parental leave benefits. These would usually be written in your employment contract or enterprise agreement. While you can potentially get both government and employer paid parental leave, it's important to consult with your employer or HR department to understand your entitlements.

Tips to getting super on track before taking parental leave

The time you take off to welcome your little one is a delightful one, but it's also a time when your super contributions may decrease or even stop. Here are three tips you and/or your partner could consider taking to help mitigate these impacts on your super.

But don't make these decisions alone. Speaking with a financial adviser can be incredibly helpful. They can guide you on the best steps to take, tailored to your own circumstances.

1. Get planning before going on parental leave

If you’re still working and can afford it, consider topping up your super. This could help soften the blow of not having regular super contributions paid into your account during your parental leave. It's like putting a little extra in the piggy bank for later. Another option is making extra contributions to your super through salary sacrifice, which is before tax. Both options will need a bit of coordination before you go on parental leave.

Check out your super top-up options here.

2. Boost your super with your spouse’s help

Starting a family often means teamwork, and that can also apply to managing your super too. If you're married or living with your partner, they can help your super grow even when you're on parental leave. Your spouse can put money into your super from their income. It's a neat way to boost your super while you're on a break. And there's a perk: your partner might even get a tax benefit. Isn’t that a win-win?

There are rules around eligibility – learn more about spouse contributions here.

3. Consider keeping your super together

As a soon-to-be parent, you've got enough on your plate. It might be a good idea to make things simpler by considering moving all your super into one account. Combining your super could help avoid paying multiple fees, which could potentially affect your super balance in the long run. Plus, it could help cut down on paperwork and admin. That's one less thing to juggle when baby arrives!