What happens to your super when you take parental leave?
Superannuation has never taken the complex working lives of women into consideration. The national scheme which is supposed to be designed to support “all Australians” to retire in comfort, seems to forget that many women take extensive career breaks and have a more disrupted life of earnings than their male counterparts.
The government’s ‘Paid Parental Leave’ scheme doesn’t include the Super Guarantee, neither do other carers’ leave payments. This means that your employer isn’t obliged to keep making contributions into your super while you’re on leave, and the government won’t make a contribution either.
The good news is that while we continue to advocate for compulsory payments of super for parents (particularly women) on parental leave, there are practical steps you can take to try and keep building your super balance with a new bub in the picture.
How to sort your super before you take parental leave
Review how your super is managed
Taking the time to ensure your super is being well managed is a good investment of time before you have a baby. If you have multiple funds, or if you’re not sure if you’re in the right fund, then it could be a good time to consider consolidating or changing accounts. At Verve, we’ve developed a free learning module (part of our Money & Mindset course) on this very topic to help you get started.
Ask your employer to keep paying you super while you are on leave
Many employers are now offering to continue paying superannuation for new parents on leave, even if their paid leave period has expired. You can point your boss or HR officer towards this helpful resource by Fair Work. This shows that paying super, even on unpaid parental leave, is best practice and a great staff incentive!
Ready to start the conversation with your employer? We’ve drafted an email you can use and send to your employer. Get the free template right here.
Consider spouse contributions and contributions splitting with your partner
This allows your partner to contribute to your super and/or split their existing contributions with you to keep your super balance growing. In some cases, this may also make your spouse eligible for a tax offset of up to $540 p.a.
Consider boosting your super by making additional personal contributions
If you have the means to do so, it’s worth evaluating whether you’ll be able to grow your balance by making contributions into your super fund while on leave. If this is the right decision for you, you may be able to claim a tax deduction for some of these contributions. Check out the ATO website to learn more.
Check out Verve’s Baby Bump Program
If you’re a Verve Member and are taking parental leave, make sure you’ve contacted us so we can rebate your annual fixed admin fees for 12 months. We can also contact your employer on your behalf (or support you to have this conversation yourself) to ask them to keep paying your super during your parental leave. Want more info? You can chat with our team today.
This blog is published by Verve Superannuation Pty Ltd (ABN 65 628 675 169, AFS Representative No. 001268903), which is a Corporate Authorised Representative of True Oak Investments Ltd (ABN 81 002 558 956, AFSL 238184), as the Sub-Promoter of Verve Super.
Verve Superannuation Pty Ltd and True Oak Investments Ltd are not licensed to provide personal financial advice. The information contained in this blog, including any financial guidance, is general in nature. You should consider seeking independent legal, financial, taxation or other advice to ensure that your financial decisions are suited to your unique circumstances.
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