Secret super tax costing South Australian mums $100 million

Industry Super Australia

South Australian mothers have missed out on more than $107 million in retirement savings because the government refuses to pay super on its parental leave scheme.

Industry Super Australia analysis shows up to 96,000 South Australian mothers have received Commonwealth Parental Leave Pay in the last 10 years but while mums took time out of the paid workforce to raise children they were being made to sacrifice thousands from their retirement savings.

This hidden super sting could cost a mother of two $14,000 at retirement.

Parental Leave is one of the only form of paid leave where 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 mothers’ savings fall further behind.

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

Up to 10,890 mums in the Adelaide electorate have missed out on $12.2 million in super payments (see each electorate’s figures in table 1 below). In the 2019-20 financial year 11,010 South Australian mothers lost $13.9 million.

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

The gender super gap at retirement in South Australia is 21%, the state’s typical man in his 60s has a balance of $204,900 – the typical woman in her 60s just $161,200.

South Australian 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 paid workforce to raise children.

Government forecasts shows the gender super gap will persist for at least the next four decades 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.

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