The Federal Government has announced a significant $1.1 billion in funding over five years to enhance the Paid Parental Leave (PPL) Scheme under which eligible parents will receive the Superannuation Guarantee of 12% on their PPL payments as a contribution to their superannuation fund. Other key announcements include funding for workplace policy implementation for PayDay Super and the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements.
Superannuation on paid parental leave
- The Government is providing $1.1 billion over five years from 2023–24 (and $0.6 billion per year ongoing) to enhance Australia’s government-funded Paid Parental Leave (PPL) scheme and improve women’s retirement outcomes. This includes $1.1 billion over four years from 2024-25 (and $0.6 billion per year ongoing) to include superannuation on PPL for births and adoptions from 1 July 2025.
- Eligible parents will receive the Superannuation Guarantee of 12% (the rate for 2025-26) on their PPL payments as a contribution to their superannuation fund.
- Funding also includes $10 million over two years from 2024–25 to provide additional support for small business employers in administering PPL, and $1.4 million over two years from 2023–24 to update communication products and documents for potential PPL recipients.
- The measure is intended to help normalise parental leave as a workplace entitlement, like annual and sick leave, and reduce the impact of parental leave on retirement incomes. It builds upon the Paid Parental Leave Amendment (More Support for Working Families) Act 2024 which received Royal Assent on 20 March 2024 and amends the Paid Parental Leave Act 2010 to provide an additional 6 weeks of PPL – beginning with an increase of 2 weeks of PPL to 22 weeks total from 1 July 2024, increasing to 24 weeks total of PPL from 1 July 2025, and increasing to 26 weeks total of PPL from 1 July 2026.
- The measure is expected to increase tax receipts by $155.0 million over two years from 2026–27 and is consistent with the Government’s proposed objective of superannuation to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.
Funding for implementation of PayDay Super and the Fair Entitlements Guarantee Recovery Program
- The Government will provide $111.8 million over four years from 2024-25 (and $12.4 million per year ongoing) to support the progression of the Government’s workplace relations agenda.
- This includes $60 million over four years from 2024–25 to the Productivity, Education and Training Fund to support employer and worker representatives in boosting workplace productivity and to support workplaces to implement policy changes for PayDay Super (as announced in the prior 2023-24 Budget).
- The Budget did not announce any further details of the Payday Super proposal, which from 1 July 2026, will require all employers to pay superannuation guarantees when paying an employee’s salaries or wages.
- The Government will also recalibrate the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024. This measure is expected to achieve efficiencies of $13 million over four years from 2024-25 (and $29.9 million over the medium term) through increased tax receipts of $63.1 million over four years from 2024–25 (and $114.4 million over the medium term), with $44.4 million over four years from 2024–25 (and $96.9 million over the medium term) expected to be paid to superannuation funds.
Superannuation balances over $3m – funding to implement Commonwealth defined benefit schemes
- The Government will provide $32.5 million over four years from 2024–25 (and $1.4 million per year ongoing) to support the delivery of Government priorities in the Finance portfolio. This includes $9.2 million over four years from 2024–25 (and $1.1 million per year ongoing) to the Commonwealth Superannuation Corporation and the Department of Finance to implement the 2023–24 Budget measure Better Targeted Superannuation Concessions for members of the Commonwealth defined benefit superannuation schemes.
- Last year’s measure, Better Targeted Superannuation Concessions, in broad terms will apply an additional 15% tax on superannuation balances exceeding $3 million. The measure is contained in the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 and Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, which are currently in the House of Representatives.
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