Australian mothers are missing out on $1.6 billion in superannuation when they go on paid parental leave.
A report released by Industry Super Australia (ISA), Paying super on parental leave shows that the gender gap between men and women is massive, with women retiring to live on only two thirds of what men have.
The primary reason is because women, who typically take time out of the workforce to have children, do not receive superannuation on paid parental leave.
The report says that women with two children would be $14,000 better off at retirement if superannuation was paid on Commonwealth Parental Leave Pay (CPLP), whilst mothers with only one child would be $7,000 better off.
CPLP is a payment that you will receive for up to 18 weeks whilst you look after your new child.
If a woman on a median wage had two children and received both the CPLP and employer funded parental leave, she would be $26,500 better off at retirement.
The research found that white collar industries are more likely to pay super on paid parental leave, which leaves poorer women, or those in casual jobs at a disadvantage.
Figures show that 37.4% of financial and insurance service industry companies pay super on paid parentlel leave, but only 8.5% of healthcare and social assistance companies do.
Research by Mckinsey shows that 66% of entry-level healthcare employees are women.
The report also calls on state and territory governments to ensure that all direct and indirect employees are paid superannuation on paid parental leave. 400,000 workers, who are mostly women would benefit from superannuation being paid on parental leave.
The jobs where super is paid for parental leave
Currently only 6.9% of enterprise agreements include a provision to pay superannuation on paid parental leave which means that 2.3 million employees are missing out on super while they are on paid parental leave. If all employers paid super on paid parental leave, around 1.7 million women would benefit.
They say that we need to stop penalising women for having children.
KPMG Australia National Chairman, Alison Kitchen shares the belief, saying, “we need to stop seeing equality of women in the workforce as welfare. It’s wrong to think of it as welfare and start thinking of it as value creation.
“It’s about recognising that they access benefits a different way and are currently missing out.”
She also highlighted that women live longer than men on average and therefore actually need more in their super fund than men do.
The reality paints a very grim picture, with women retiring with 20-30% less super than men do. In Queensland that number increases to 30% and it’s even worse in Western Australia at 39%.
Former Commonwealth Attorney General, and HESTA Chairman, Nicola Roxon noted: “When women first get into the workforce up until they’re 30 they’re tracking really well and then there’s a massive drop and the gap widens from there.”
Kitchen said: “When you return to work you need to be able to do catch up super so women don’t miss out”.
She added that KPMG’s “Scheme is aimed at being fully flexible so we offer 26 weeks for men and women. It can be taken flexibly within the first 24 months of a child’s birth.
“Often women want to go back 2-3 days a week and we encourage men to do the same, so both parents work flexibly. Two years gives you a lot of flexibility”.
Maurice Blackburn CEO, Jacob Varghese said that Maurice Blackburn pays super on paid parental leave for up to 18 weeks. He referenced his own personal experience when he had children.
“I personally took leave in 2008 when it wasn’t culturally acceptable and they thought that I lacked career aspiration and that it shows your career won’t be damaged at Maurice Blackburn if you do take parental leave”.
Ms Roxon said that HESTA pays super on paid parental leave up to 14 weeks and up to 12 months on unpaid parental leave.
Chairperson of the Aged Care Workforce Industry Council, Libby Lyons said: “Let’s look to the future and stop discriminating against 50% of the population”.
A big issue highlighted by the report is that Australians are not aware of this problem due to their lack of interest in superannuation. 68% of Australians think that super is already paid on top of parental leave and when they discover that it’s not they think that it should be.
The report calls on state and territory governments to start paying super on top of paid parental leave to set an example to the private sector.
Roxon agreed: “Government needs to lead by example.”
ISA’s report concludes that if we don’t act now, women will be disadvantaged for at least four more decades.