Fee-free Superannuation for New ParentsAugust 06 2018
We rely on regular contributions to our super to keep it in the green. But when going on parental leave for extended periods of time, our contributions stop. That’s where the fees begin to eat away at our hard earned dollars stockpiled for our retirement. This devastating truth leaves mostly women at a vast disadvantage to their male counterparts. On average here in Australia, women retire with nearly 40% less than their male equivalents at work. 30% of women don’t even have super, and the average woman has $157,000 at retirement.
So we’re proud to share that Grow Super is one superannuation fund that is taking the initiative for new parents. Where they won’t need to stress about fees eating away at their nest egg during their parental leave. With women being the predominant parental leave taker in Australia, the private sectors experienced 118,190 parents taking parental leave in 2016.
“GROW Super is providing fee-free super for new parents for up to 6 months following the birth of their child - this is offered to both men and women as long as they are the primary carer. GROW Super’s own parental leave policy is to pay full superannuation guarantee payments for 12 months for those on parental leave, putting their money where their mouth is. Employers supporting their staff and providing flexible superannuation options for parental leave will also contribute towards closing the super gap and the issues it affects. During the time on leave, typically no superannuation contributions are being received yet fees are still being incurred, creating a negative financial effect. GROW Super is hoping other funds will join them in offering fee-free parental leave.” found on the Grow Super site.
The benefit this provides all Australians is seen through the magic of compound interest. By relieving the negative financial effect of fees without super contributions, the parent can count on having a bigger amount for compound interest to have the biggest effect. The benefit carries forward with the growth of the parent’s super. An untouched amount today doesn't have that big of an effect tomorrow, but in 10 years or 35 years, the significance is seen. Check out Canstars article to see what we’re talking about.
It’s hoped that other superannuation funds will take the hint that Australians are better off if we don’t charge fees to people on parental leave. The short-term effect isn't noticeable, but that’s only because the damage sets in long after the fees are charged, as retirees will have less to use. This will no doubt put more strain on families and older Australians who have worked their entire life.
By Declan Cavanagh