Balancing the scales: Is the motherhood penalty affecting your superannuation?

Between clothes, cribs and care, it is no secret that child-rearing is a costly exercise, but one of the biggest prices of parenthood is the price working women often unknowingly pay to start a family in the first place.

The ‘motherhood penalty’ refers to the drop in a woman’s earnings following the birth of a child. Though the damage is often discreet at first, the effects can be felt long after a woman returns to the workforce, and ultimately widens the retirement savings gap for women.

The penalty is driven by reduced workforce participation, fewer hours worked, slower career progression and, in some cases, outright discrimination. A man’s earnings, on the other hand, typically recover quickly after becoming a father – in stark contrast to the almost 50 per cent drop in a woman’s earnings experienced for as long as a decade after having a child. 

For women looking to take the next step in career and family planning, here are some tips to protect your superannuation from the motherhood penalty.

Growing your super while raising your children

There are a few key considerations I encourage prospective mothers to take when family planning, the first being to start saving early. The power of compound interest is not to be underestimated, and a savings plan established early will help to close the gap for women’s retirement savings. 

It is, however, important to remember that earnings from a savings plan within a super fund cannot be accessed until retirement age, so in the interest of flexibility and accessibility, women would be wise to implement savings outside of their super as well.  
 

When it comes to planning for parental leave, couples should assess the long-term cost of time away from the workforce in terms of reduced or lost income, and not just the short-term cash-flow impact. 

For a two-parent family in this situation it is essential to avoid simply sidelining the mother. Sharing leave more evenly between parents can reduce the long-term penalty borne by mothers for years after they’ve left naptime and nappies behind.

During parental leave, I’d encourage people to make personal super contributions where cash flow allows. If a woman or her partner can contribute just a nominal sum, it can work to significantly reduce the long-term retirement savings gap. Of course, this is also applicable to men if they are the lower income earner.

Prepare for the worst, hope for the best

While it may be the furthest thing from a person’s mind when starting a family as a couple, planning for a single retirement is crucial in protecting a woman’s financial security. With women living longer and ‘grey divorces’ on the rise, poor financial planning combined with systemic lower lifetime earnings are seeing women over 55 become the fastest-growing group at risk of homelessness in Australia.

To offset the impacts of the motherhood penalty, trade the romantic for the pragmatic and plan for a single retirement in the event life takes some unexpected turns.

Tips to keep up with your Superannuation

With all of this in mind, here are a few practical ways women can grow their super as they’re growing their families:

• Maximise concessional contributions. From 1 July, the maximum you can contribute to super (pre-tax) is $32,000 p.a., which includes any superannuation guarantee by your employer. If you have surplus cashflow, you can top up your contributions via salary sacrifice. There is also the ability to make “catch up” contributions from the previous five years provided your superannuation balance is below $500,000.
• Non-concessional contributions. From July this year maximum after-tax personal contributions are increasing to $130,000 a year or $390,000 over three years. This is worth considering if you have surplus cashflow and you are approaching retirement age or have no debt outstanding, provided you don’t need the funds prior to reaching retirement age.
• Partner contributions. If a woman’s annual income is below $40,000 their spouse or de-facto partner can contribute up to $3,000 a year in superannuation and be eligible for a tax offset of up to $540 a year. Further to this, a partner can split the concessional contributions made to their own account and transfer some of this balance. Another avenue for partner contributions is super equalisation, which balances superannuation funds between partners so both can enjoy the benefits of a tax-free pension.
• Employer contributions. It is mandatory for employers make super contributions to anyone over the age of 18, regardless of their income level, so check payslips regularly to ensure employer contributions are being made in line with the law. Beyond this, from July this year Payday Super will take effect, meaning employers must align super contributions to payroll instead of making quarterly contributions, leading to more regular deposits in an employee’s super account.

The small but steady inequities in pay experienced by working mothers can compound significantly over time. To proactively protect yourself from the motherhood penalty, talk to a professional advisor now about what steps you can take to secure your financial future.  

This article was originally published in the Sydney Morning Herald and The Age on 2 September 2026.