What you can do to ensure that, when the work stops, the benefits do not
The birth or adoption of a child can be a wonderfully life-changing time in someone’s life.
With parental responsibility comes a potential change in finances for the growing household.
As such, it makes sense to understand what’s happening and what information new parents should know when it comes to their finances.
In Australia, there are 18 boys and 17 girls born on average each hour. The median age of new mothers is 31.2 and fathers is 33.3. It’s estimated that 65% of mothers aged 25 and over were in some form of employment while pregnant with 37% working all the way until just one week or less before the birth of their child. Those mothers working in the private sector were almost twice as likely to leave at one week or less (41%) before the birth of their child than those working in the public sector (21%).
Post birth, there is a predominance of women providing primary care however it’s estimated that 1 in 20 fathers are now taking primary parental leave. In the private sector alone, 84,884 mothers and 33,306 fathers take parental leave in a year.
What you should know:
In terms of work, most employees are eligible to take unpaid leave with an entitlement to return to their pre-parental leave position. If the position no longer exists, an alternative position that is suitable is to be made available and which is nearest in status and pay to the pre-parental leave position. For pregnant employees, unpaid leave can start up to six weeks before the expected date of birth, or earlier if both the employee and employer agree.
For those parents who decide to take on a primary carer role, there can be a number of critical changes which may occur as a result of stepping away from paid work. Chiefly, the cessation of work can result in a potential inability to access certain product features and benefits. This can include income protection benefits when held within the superannuation environment, where conditions of release restrictions imposed within the Superannuation Industry (Supervision) Regulations (Item 109) limit benefits from being paid within a regulated superannuation unless they are for the purpose of continuing (in whole or part) the gain or reward which the member was receiving before the temporary incapacity.
Also, some Total and Permanent Disablement policies, which are typically linked to an inability to work in your own occupation or any occupation based on education, training or experience, may require a higher level of disablement if someone is no longer in full time or
It is worthwhile exploring TPD benefits that support people insured who may no longer be working by allowing access to any occupation TPD definition based on their most recent occupation which is not limited to a specific number of prior months, in addition to the unique Extended Activities of Daily Living criteria, ultimately offering more ways to qualify for a benefit.