Growing your superannuation while on parental leave can be nearly as daunting as somehow managing to put the kids to bed on time. Thankfully we’ve got some tips that can help you…although not with the sleep part!
While most employer paid parental leave excludes superannuation, this doesn’t mean you have to forget about adding to it.
What’s also encouraging is that experts are reporting that an increasing number of women, and indeed men who are taking parental leave, are using various strategies to ensure their super balances don’t suffer when they take time off work to care for their children.
“The first thing anybody who is looking at maternity leave should understand is the impact that not contributing to super will have on their retirement balance,” says Pauline Vamos consultant and former Chief Executive Officer of the Association of Superannuation Funds of Australia.
“For example, research found that if you take two years off on maternity, you have to contribute an extra percentage for the rest of your working life because you lose the benefit of compounding.”
So what can you do? Here’s at least five ways to keep your super growing.
1. Ask and you may receive: If your employer is providing paid leave see if you can salary sacrifice into super and, or get your employer to pay your superannuation guarantee into your pay.
Your super guarantee is the 9.5 per cent minimum compulsory contribution paid in addition to your wage by Australian employers into your chosen super fund.
2. Ask again: If your employer does not provide paid parental leave, see if your employer will at least make super contributions – some do.
3. Get organised: Make sure that your super balance is the best investment option for you. Consider are you in a high risk share fund? Or low risk cash? Do your homework.
4. Don’t over pay for add-ons: Turn off and stop paying for any salary continuance insurance premiums, such as disability cover which won’t apply while on maternity leave. No one will tell you if you are paying this.
It is up to you to investigate and switch it off it if provides zero benefit to you.
5. It’s a family thing: Think about your spouse (if you have one) or yourself making additional contributions to your super fund.
“Current super policy is designed by men and for men. It assumes you are going to work 35 years straight so there is no flexibility for employers to pay higher amounts and there is no flexibility for contributions caps and we need to see that.
“More women take time off work to have children, plus they live longer and so we are going to have a lot of older women, in single households with different spending patterns to men wanting to do stuff. So let’s capitalise on that as a nation,” says Ms Vamos.