Tasmanian mothers have been duded on more than $30 million in retirement savings because the government refuses to pay super on parental leave.
Industry Super Australia analysis shows up to 27,000 Tasmanian mothers have received Commonwealth Parental Leave Pay in the last 10 years but, while they took time out of the paid workforce to raise children, they were being made to sacrifice their retirement savings leaving them thousands worse off.
Parental Leave is one of the only types 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 women are missing out, 99.3% of the state’s Commonwealth Parental Leave Pay applicants were women and just 0.7% men.
Up to 6,450 mums in the Franklin electorate, covering some of Hobart’s suburbs and the Huon Valley, have missed out on $7.2 million in super payments (see table 1). In the 2019-20 financial year 3,100 Tasmanian women went without almost $4 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 typical Tasmanian woman is retiring with $29,000 less super than men, the median super balance for a Tasmanian woman in her early 60s is just $142,000, lagging the male median of $171,200.
Tasmanian women of all ages have less super than men, but the gap begins to widen dramatically when women are in their 30s, when many take time out of the 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.