Companies in highly competitive areas for talented staff are moving to pay super on parental leave, research shows.
The average woman who takes five years out of the workforce to raise children loses approximately $170,000 in superannuation and if she takes ten years out of the workforce she stands to lose a massive $400,000.
According to figures from the Australian Taxation Office, women’s median superannuation account balances are 20.5 per cent lower than those of men at retirement age.
Telstra, Woolworths, CBA, Westpac, Lion, PwC, Deloitte, Viva Energy and King & Wood Mallesons are among the household names now making super contributions to couples who have just had children.
Not-for-profit organisation, Growing Potential, which started in 1948 as Blacktown Community Kindergarten is trying to bridge the super gap by paying women superannuation while they are receiving the government’s 18 week parental leave.
The average employee who takes parental leave could gain approximately $7,000-$8,500 over 12 months.
The organisation had been considering paying superannuation on parental leave for a while and hold the belief that women shouldn’t be penalised for becoming mothers. The decision also fits in with the organisation’s culture overall, which is as a community-focused organisation that genuinely care about people’s lives.
The organisation, which has 145 staff, 91% of which are women, will pay its staff full super when they are on parental leave.
CEO Mr Otto Henfling backed Really Simple Money’s Supawomen campaign, calling on the government to “stop penalising women who take time out of paid work to raise children at a cost of sacrificing thousands (of dollars) in their retirement savings.”
He added: “It’s blatantly clear that more needs to be done by all governments to improve gender equality for women at work and the superannuation system.
“Australian women should not have to make this sacrifice and I am very proud that the vast majority of Growing Potential’s female staff now needn’t contend with this unfair discrimination and that’s what it is, the current system is discriminatory against working mothers.”
He is calling on leaders of other organisations to take a proactive approach “especially those within female-dominated work sectors to also take a proactive approach and best practice approach by continuing to pay superannuation on parental leave.”
The response has been positive, with one employee, Ashleigh Bender, who has been employed by Growing Potential since 2015 and is an Employee Relations Coordinator first took parental leave in 2018 and is due to have her second child in May 2022.
She will benefit from Growing Potential’s parental leave superannuation initiative which has been in place since 1 January 2022.
When she had her first child and took parental leave the first time she didn’t realise her superannuation contributions would stop and wasn’t too concerned. It wasn’t her priority and she figured she could sort it out in the future.
Now that she’s a mother with a daughter she wants the government to do more to close the gap. She took ten months parental leave after her first child and plans to take ten months after her next is born in April.
She says: “I feel secure knowing I”m not going to be further disadvantaged and also proud that I work in an organisation that cares about my future in 30 years time.
“The government should be doing more to close the gap. I’m speaking up for future working mothers and for my daughter’s future,” she adds.
Given her recent promotion to the Employee Relations team she understands just how important superannuation contributions are to her retirement savings.
Under the Government Paid Parental Leave Scheme, which was introduced in 2011, working parents receive up to 18 weeks of pay at the national minimum wage. It is not however compulsory for the government or employers to pay superannuation on top.
The Workplace Gender Equality Agency (WGEA) released figures that show that 88% of all parental leave is taken by women, which means it is a large reason for today’s gender superannuation gap. WGEA’s 2020-21 data snapshot reveals that 81% of employers contribute to superannuation on the paid component of parental leave and only 7% pay superannuation on the government portion.
According to figures from the ATO in 2018-19, the median superannuation balance at the age of 60-64 was $137,051 for women and $178,088 for men, which equates to a 30% difference.
The gap can be attributed to women earning less than men, having more career breaks to raise children and/or care for others and an increased likelihood of working part-time instead of full time.
Mr Henfling says; “Growing Potential’s superannuation initiative encapsulates our mission to ‘support and grow the potential of children, families and communities’ and we truly hope our adoption of this initiative sparks momentum around the issue.
He adds; “not for profit and for-profit organisations need to act now to improve gender equality for women at work. Otherwise, Australian women will continue to pay the price and retire with less than men for decades to come.”
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