Career breaks and your super
What’s the cost of a career break?
There are all sorts of reasons for taking a break from your job. Whether you’re in your 30s, 40s or 50s, raising a family, caring for a loved one or just taking unpaid leave for your own wellbeing, a career gap – and loss of regular income – can affect your super.
Our career break calculator can give you a good estimate of what that cost might be.
- The calculator assumes you do not receive any super contributions during your career break
- Full time is considered to be five days or more per week
- Superannuation Guarantee Contribution is currently 10.5% of ordinary time earnings and is presently legislated to incrementally increase to 12% by 2025
- The calculation assumes no change to superannuation guarantee or wage rates
- The dollars shown are not discounted for inflation
- The 'missing out' figure is calculated according to the time you will be away from work plus any period thereafter where you are working less days than before you took your career break
This tool is not intended to be relied upon for the purposes of making a financial decision. Consider a fund's PDS and your objectives, financial situation and needs, which are not accounted for in this information before making an investment decision. You are responsible for your own investment decisions and should obtain specific, individual advice from a financial services licensee before making any financial decisions.
Super tips for taking a career break
For many people, career breaks are a fact of life, but there are things you can do to minimise the negative effects.
- If you have a partner who is working, discuss getting them to make spouse contributions to your super while you’re on your break.
- While you’re still working, salary sacrifice or make voluntary contributions to your super to help reduce any superannuation shortfall as a result of not earning an income.
- If it’s feasible, pick up some part-time, casual or freelance work while you’re on a break. If your work hours are not enough to attract employer super contributions, invest some of the money you earn in your super account and hence, your future retirement income.
Making the most of a lower income
If you are on a lower income, you may be eligible for a Government Co-contribution to your super. Under this scheme, for every dollar that you contribute voluntarily to your super, the Australian Government will contribute 50 cents to your account up to a maximum of $500 per year.
If you are earning during your career break, but less than $57,016 per year, it is worth checking whether you are eligible.
What more can be done?
All levels of government have a role to play in making sure the superannuation system works equitably. This means bridging the gender super gap so women are not retiring with less than men.
Changes that would help address the gender super gap are:
- The federal government paying super on the Commonwealth Parental Leave Pay Scheme. This would mean a mother of two who accessed the scheme would be $14,000 better off at retirement.
- State and Territory governments paying super on the paid parental leave schemes of their direct and indirect employees. If these governments extended the coverage of super on paid parental leave, over 400,000 workers, mostly women, would benefit.
- Employers have an opportunity to lead the way on best practice by paying superannuation on employer funded parental leave.
For more information read ISA’s report on paying super on parental leave.