Australia must urgently address the pensions gender gap in the upcoming federal budget, warns a body representing the nation’s A$3.3 trillion (US$2.1 trillion or RM9.84 trillion) of retirement savings.

The government needs to make swift reforms to an industry that currently leaves retired Australian women with typically 23.1% less in their pension accounts than men, according to the Association of Superannuation Funds of Australia (ASFA).

Pension payments should be made to workers on paid parental leave following the birth or adoption of a child, ASFA said in its pre-budget submission document.

The report also recommends a bonus either in addition to the payments or as an alternative.

“Rising inflation, broken work patterns, Covid-19, and the early release of superannuation have all eroded the retirement savings of low-income earners and women in particular,” said ASFA chief executive officer Martin Fahy.

While a number of companies do pay workers that have taken time off to have children, pension payments aren’t a mandatory part of paid maternal or paternal leave.

Women are disadvantaged because they’re more likely to take the leave than men, according to recent research from the country’s top pension fund AustralianSuper Pty.

Australian Treasurer Jim Chalmers will hand down his first budget on Oct 25.

The national deficit is likely to be smaller than expected earlier this year.

This is thanks to the strong recovery from the pandemic combined with high commodity prices, Deloitte Access Economics forecast this week.

Stephen Jones, the government’s minister for financial services, wasn’t available to comment.

ASFA said adding pension payments to parental leave would likely incur a net cost for the government of around A$200mil (RM586mil) a year, with additional annual costs from employers.

“While the aggregates of the system are strong, two key challenges remain – closing the gender gap and addressing the long-term sustainability of a retirement system characterised by increasing capacity for self-reliance in retirement, but a growing ageing population,” said Fahy.

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