April 4 2024

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.
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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:

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.

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Taking parental leave is one factor that contributes to the gender super gap, as taking time off work can result in lower super balances for women. This gap in super savings can have long-term implications for financial security and retirement outcomes. 

At Rest, we believe that every Australian is entitled to comfort and security in retirement regardless of their gender. Want to feel empowered with your super? Check out our tools, advice, and handy super tips for women.

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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.

  Child’s birth or adoption date
Before 1 July 2023 After 1 July 2023
Parental Leave Pay Eligible primary carers may get up to 18 weeks of paid parental leave.
Eligible carers may get up to 20 weeks of paid parental leave (applies to both partnered and single parents).
Dad and Partner Pay Eligible carers (which excludes birth mothers) may get up to 2 weeks of paid parental leave. Not available (combined with Parental Leave Pay).

Change coming:

The Federal Government has announced its commitment to include superannuation contributions on the Commonwealth Parental Leave Pay scheme from 1 July 2025.

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!

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Things to consider

Before combining your super, consider if Rest is right for you. Check out the fees and costs of your other funds plus any benefits that would be lost, such as insurance cover. Make sure your other fund knows about any contributions you intend to claim a tax deduction for, before combining with Rest. If you have any questions, speak to a licensed financial adviser, or visit the MoneySmart ASIC website for more information.

Learn more 

Bump it up here!

To help you get everything in tip-top shape before the baby arrives, download our beautiful, bouncing new Bump It Up! Guide. It’s a free, easy-to-use, downloadable book of tips, tools, hacks, trackers and useful checklists to remind you of things you might not have thought of. It may even help make sure you’re not losing quite so much sleep over bump-related money and budget stuff.

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