Thinking about financials is important when you prepare to have a baby. Did you know that your employer doesn’t have to include superannuation contributions with your maternity leave payments?
Career breaks are something most women consider inevitable if they’re planning to have children, and not thinking ahead could have dire consequences on your super.
Did you know that your employer doesn’t have to include superannuation contributions with your maternity leave payments? Employers aren’t legally obligated to pay you super when you go on maternity leave.
Despite the paid parental leave pay meeting the $450/month threshold for SG payments (Super Guarantee is the 9.5% of your salary that your employer has to pay into your super), paid leave does not include super contributions. The assumption that super is included in paid leave may be a reason for women not contributing to their super during their career breaks.
What does a lack of super during your career break mean for you?
Women who take career breaks and don’t contribute to their super will face two problems:
When taking a look at the average super balance for parents, the obvious difference between male and female parents is stark, with the biggest difference forming between the ages of 30-35 when women are most likely taking career breaks. That dip then adversely affects future compounding interest returns, ultimately resulting in a lower end balance.
“The assumption that super is included in paid leave may be a reason for women not contributing to their super during their career breaks.”
Here’s what you can do to nurture your super when you take a career break:
So, in addition to all the other ways in which you’re preparing for your newborn - painting the nursery, attending antenatal classes and stocking up on nappies - make sure you take the time to review how you’ll address your super whilst on parental leave. The decisions you make now can ensure you don’t lose out on tens of thousands of superannuation dollars, and can enjoy your well-deserved retirement.