How to Boost Your Super While Planning for Parental Leave

If you’re employed in Australia, you’re likely familiar with compulsory superannuation payments from your employer, currently set at 11% and set to increase to 12% by July 2025, writes author Ana Kresina

Super is often overlooked when planning for parental leave, given its long-term nature and the immediate expenses associated with raising a child. Yet, neglecting super can significantly impact retirement, especially for women over 55, who face heightened vulnerability to poverty and homelessness due to the compounding effects of inadequate super, part-time work, and the gender pay gap.

This compounding effect is known as the super gender gap, where Australian women retire with 23 to 28% less super than men. One source states that women retire with $136,000 less in superannuation than men and will accumulate $151,000 below what is considered necessary for a comfortable retirement. Most super funds charge fees during leave, further widening the divide.

According to a Finder report, the average full-time working woman who takes one year of parental leave will lose $16,800 in super. If she then chooses to work a four-day week for two subsequent years, that figure increases to $39,500.

While parental leave may impact super, expectant and new parents can take steps to boost it. Being aware is the first step. Using a compound interest calculator online allows you to see the compounding effect of missed contributions during leave. Finances may be stretched thin during this time, but planning ahead can pay off in the long run.


Here are ways to boost your super during parental leave:

  1. Pre-tax Contributions: Salary Sacrifice
    • Salary sacrifice is an agreement with your employer where you sacrifice part of your pre-tax income, and in return, your employer invests that into your super. This is lucrative because salary sacrificing into your super is only taxed at 15%, lower than most people’s marginal tax rate.
    • For example, if you earn $80,000 and salary sacrifice $10,000, you only have to pay your marginal tax rate on $70,000, and the $10,000 you salary-sacrificed is taxed at only 15%. This helps you pay less tax on your income, and your money is invested in your retirement savings.
    • Note: Concessional contributions have a cap of $27,500 annually, including personal deductible salary sacrificing and employer contributions. When your superannuation balance is less than $500,000, you can carry forward the unused contribution limit for up to 5 years.
  1. Government Super Co-contribution
    • Low-income earners may qualify for a maximum contribution of $500 via the government super co-contribution scheme by contributing $1,000 to their super.
  1. Spouse Super Contribution
    • The spouse super contribution allows you to pay money into your partner’s super from your after-tax income. Your partner may claim a tax offset of up to $540 on the $3,000 they can contribute to your super if they earn $37,000 or less for the financial year. This ensures your partner’s retirement savings don’t suffer during parental leave.
  1. Spouse Super Contribution Splitting
    • Contribution splitting allows you to transfer a portion of your recent super contributions to your partner’s account, promoting balance without an income test.

In conclusion, while parental leave might affect super, proactive measures can mitigate its impact.

This is an extract from Kids Ain’t Cheap by Ana Kresina, a financial educator and author, offers valuable insights in her book, “Kids Ain’t Cheap: How to plan financially for parenthood and your family’s future,” as well as on the Get Rich Slow Club finance podcast. Available from directly from Major Street Publishing RRP $32.99