A few decades ago, the arrival of a baby was celebrated with an understated backyard shower or a pint at the local pub to wet the baby’s head. These days many expectant parents are anticipating the arrival of their bundle of joy with diamond bracelet “push presents” and elaborate “babymoon” holidays.
While these can be a wonderful way to mark a momentous occasion (if you can afford it during a cost of living crisis), there’s one gift that’s better than all these: a generous superannuation contribution from your partner.
Give a baby gift to your partner that will last until retirement.Credit: E+
If the choice is between a nice piece of jewellery or a hefty super contribution that will ensure she’s no financially worse off in the long-run simply for starting a family, I know which gift most women would choose. Expensive gifts are lovely, but supporting her long-term financial independence is even better.
While there are many factors that contribute to the disparity in superannuation between men and women, the most obvious culprit is the gender pay gap. A report from the Workplace Gender Equality Agency recently revealed that, on average, women are earning 21.7 per cent less than their male colleagues, and retiring with an average of 25 per cent less superannuation. This gap in earnings, coupled with cost-prohibitive childcare (which can force women out of the workforce) and women bearing the brunt of caring responsibilities (meaning they can work only part-time or casual hours), takes a huge toll on a woman’s superannuation balance. Fatherhood, on the other hand, has little to no financial impact.
In Australia, women account for 88 per cent of all primary carers’ parental leave. Once a baby is born, their wages fall by 55 per cent over the first five years of parenthood due to the shift to part-time or casual work. Even beyond that milestone, data from the Department of Finance shows “this gap improves only slightly but remains high in the 10 years following the arrival of children”.
With this drop or stagnation in wages comes a drop or stagnation in super contributions. For many women, it results in a deficit of around $100,000 by retirement.
This can lead to long-term poverty, something we are seeing play out in real time as older women become the fastest growing cohort of those experiencing homelessness. Many women of retirement age have little or no safety net to fall back on after years spent raising children and inadequate super contributions.
Last week, the federal government announced it will introduce 12 per cent superannuation on its Paid Parental Leave (PPL) scheme, which will equate to around $106 per week. Social Services Minister Amanda Rishworth noted the change, “helps normalise taking time off work for caring responsibilities and reinforces PPL is not a welfare payment – it is a workplace entitlement just like annual and sick leave”.
While this policy change is a great start, it’s not enough to bridge the gap that begins the day a woman takes maternity leave. The most obvious issue is that, for many women, a contribution of $106 per week is a lot less than she’d be contributing through her salary. Then, there’s the amount of leave women are taking. Though most women take a minimum of six months’ maternity leave, the PPL scheme currently only accounts for 20 weeks (around five months), meaning any leave taken after that will be without any super contributions until she returns to work. So while this return brings the return of some super contributions, it doesn’t bring the contributions back up to what they were before a baby was born. What’s more, with a rollout date of July 1, 2025, the change is unavailable to anyone pregnant or already using the government’s PPL scheme.
Want to be a true romantic? Top up your pregnant partner’s super
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13.03.2024
A few decades ago, the arrival of a baby was celebrated with an understated backyard shower or a pint at the local pub to wet the baby’s head. These days many expectant parents are anticipating the arrival of their bundle of joy with diamond bracelet “push presents” and elaborate “babymoon” holidays.
While these can be a wonderful way to mark a momentous occasion (if you can afford it during a cost of living crisis), there’s one gift that’s better than all these: a generous superannuation contribution from your partner.
Give a baby gift to your partner that will last until retirement.Credit: E
If the choice is between a nice piece of jewellery or a hefty super contribution that will ensure she’s no financially worse off in the long-run simply for starting a family, I know which gift most women would choose. Expensive gifts are lovely, but supporting her long-term financial independence is even better.
While........
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