Government to pay super on paid parental leave
In an initiative to promote women’s economic equality, the government has introduced legislation to pay super on paid parental leave (PPL) from 1 July 2025.
From 1 July 2025, parents will receive 12% superannuation on government-funded paid parental leave (PPL) on top of the minimum weekly wage of $915.90 per week.
If enacted, this measure will provide parents who access the PPL government scheme with super contributions paid into their nominated super account equivalent to 12% of their leave pay.
Current eligibility for PPL
> Residency test
A person must meet the residency requirements from the day they become the child’s primary carer until the end of the PPL period.The parent must be an Australian citizen, permanent resident or an eligible temporary visa holder.
> Work test
To meet the paid parental leave work test, an individual must have:
worked for at least 10 of the 13 months (295 days in a 392-day period) prior to the birth or adoption of the child
worked for at least 330 hours in the 10-month period (at least 7.6 hours a week on average), and
had no more than an 8-week gap between 2 consecutive working days.
> Income test
Eligibility for the government scheme is limited by taxable income measured in the year prior to having the child. For the 2023–24 year, the income threshold is $175,788 or $364,350 for a 2-parent family.
In a 2-parent family, parents may share the current 22-week PPL between them (increasing progressively to 26 weeks from 1 July 2026).
Introduction of super payments by the government
From 1 July 2025, parents accessing the government scheme would also receive government-funded superannuation contributions into their nominated super account, at 12% of the leave pay.
The current minimum weekly wage of $915.90 per week.
Under the proposed legislation, the Australian Taxation Office (ATO) will make an annual payment of superannuation to the parent. Included in this payment will be a nominal interest amount to cover any forgone income not received as a result of an annual payment being made.
The ATO will make the payment in the same way they make a Government Co-Contribution payment.
Other matters
From 1 July 2024, 2 additional weeks of PPL will be added each year. Currently, parents may take up to 22 weeks PPL, which will increase each year until it reaches a total of 26 weeks by July 2026.
Also, each parent will be provided a reserved leave of 4 weeks from July 2026 intended to encourage shared care. The concurrent leave available from July 2026 means that both parents can take 4 weeks of PPL at the same time if they wish to do so.
Next steps
This measure will have implications for both employees and employers.
> Employees
If enacted, the benefit a single parent may receive for 2 children would amount to $4,836 (based on the current 22-week PPL period). Compounded annually for an average of 30 years, this will result in a more than $20,000 increase in superannuation balances upon retirement.
> Employers
This measure does not change how employer-run PPL programs are conducted. Although some employers choose to pay super, the introduction of this measure does not mandate employers to make superannuation contributions for any PPL they may pay to their employees.
Please feel free to contact our office if you have any queries in relation to this matter.
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