Superannuation on Paid Parental Leave Starts July 2025

On 7 March 2024, the Australian Government announced a major change to its Paid Parental Leave (PPL) scheme: superannuation will now be paid on government-funded PPL. This reform, passed into law in October 2024, is set to take effect from 1 July 2025.

The goal is simple but significant—to reduce the retirement savings gap, particularly for women, by ensuring parents continue to build super while on parental leave.

Here’s what this means for families and employers.

A Step Toward Fairer Retirement Savings

Until now, super wasn’t paid on PPL. This meant many parents, particularly mothers, missed out on contributions during time away from work. From 1 July 2025, that will change.

Under the new legislation, eligible parents will receive a superannuation contribution called a Paid Parental Leave Superannuation Contribution (PPLSC). This will be equal to 12% of their total PPL payments and paid into their nominated super fund.

This contribution will be made into the parent’s nominated super fund, helping reduce the long-term impact of taking time out to care for a child.

This move is part of the broader Working for Women strategy and is a meaningful step toward improving gender equity in retirement outcomes.

How and When It Will Be Paid

Rather than receiving super along with weekly PPL payments, parents will receive a lump sum contribution once a year, paid directly by the ATO into their super fund.

For example, if someone receives PPL anytime during the 2025–26 financial year, their super payment will be made in July 2026. The payment will also include a small interest component to account for the delayed payment.

This contribution will be treated as a concessional contribution, meaning it counts toward the individual’s cap (which is $30,000 from 1 July 2024) and will be taxed at 15% within the super fund.

Do Employers Need to Do Anything?

No action is required from employers. The ATO will handle the super payment directly and communicate with the recipient’s super fund.

That said, this change adds more moving parts to the broader PPL system. While employers won’t be involved in processing these contributions, staying informed and keeping payroll systems up to date is always good practice.

What Will Parents Receive?

The ATO will issue a written notice confirming:

• The amount of the super contribution

• The super fund it was paid into

• How to request a review if necessary

  
  

Parents do not need to apply separately. The ATO will use information from Services Australia to calculate and process the contribution automatically.

This change recognises the importance of supporting parents—especially women—through all stages of their working lives. While employers don’t have extra responsibilities under this reform, it’s a strong reminder of the evolving landscape of payroll, leave, and superannuation.

If you’d like help reviewing your payroll setup or preparing your business for EOFY and beyond, book a call with Vivid Enterprise Solutions. We’re here to make compliance easier and business clearer.

Disclaimer: This article is intended to provide general guidance and is not specific advice. We encourage you to seek tailored advice for your circumstances.