Your guide to superannuation payments on parental leave in 2025

Summary

In a win for all parents, new Commonwealth legislation to boost retirement savings by paying super on Government-funded Parental Leave Pay starts from 1 July 2025. Announced as part of the Working for Women strategy, this change marks a major leap forward in closing the gender super gap and growing the financial future of new parents while they take leave to be with their baby.
 

What this means for new parents

Under the new legislation, any eligible parents with babies born or adopted on or after 1 July 2025 will see an additional contribution to their superannuation fund. This contribution is equivalent to the superannuation guarantee, which is 12% on-top of the Parental Leave Payment.  

Previously, parents accessing Government-funded Parental Leave Pay would not receive super on these payments. While some employers with paid parental leave schemes pay super on top, these new laws ensure that parents using Government-funded leave receive the same benefit. 
 

Addressing the gender pay gap

While this legislative change applies to both men and women, it is a significant victory in the effort to close the gender super gap. Women frequently serve as primary caregivers, which often results in them facing the "motherhood penalty" – disparities in super savings due to career breaks taken for caregiving compared to their partner.  

When they take parental leave, their super payments stop, causing a significant hole in their savings for retirement. According to a 2023 report by AMP’s Deputy Chief Economist Diana Mousina on the financial literacy gap, Women in Australia retire on smaller superannuation balances than men, with their average superannuation balance at age 60-64 being 21% less than men at the same age – a balance of $406,000 for men compared with $321,000 for women¹. By ensuring super is paid on parental leave, this policy helps to mitigate the long-term financial impact of these breaks, promoting greater financial security for them in retirement.
 

How the superannuation payments will be made

Unlike the standard superannuation guarantee contributions, which are made at least quarterly, these super payments will be made as a lump sum, including an interest component. The payment will be administered by the Australian Taxation Office (ATO) into your super funds and will occur after the end of each financial year in which parental leave was taken. So if you take parental leave in the 2025-26 financial year, the first of these payments will be distributed from 1 July 2026.
 

How much will parents benefit from this payment?

From 1 July 2025, Australian Paid Parental Leave increases to 120 days (24 weeks) and is paid at a rate of $183.16 per day. Based on the 12% super guarantee, parents on parental leave will receive approximately $2,637.50 in super over the length of their leave, plus interest. For a 30-year-old parent, the compounding interest earned by this extra super could result in a boost of $6,972 by the age of 65².
 

How else can I top up my super during parental leave?

In addition to the Government's new super contributions on Parental Leave Pay, there are several proactive steps you can take to bolster your super during your time away from work. 

You might consider making voluntary after-tax contributions to your super fund, which can be done regularly or as a one-off payment. These contributions can potentially benefit from the government's co-contribution scheme, where eligible individuals on a low income receive extra contributions from the government, enhancing their super balance. 

Another approach is for your spouse to make contributions into your super while you are on leave. By contributing to your super, not only can they help your retirement savings grow, but your spouse may also benefit from the spouse contributions tax offset.