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Current financial support for new parents

Current financial support for new parents

16 Jun, 2014 - 3 min read

Current financial support for new parents

Parents of Australia had best start paying attention to the government’s finances.

The changes taking place to the federal Baby Bonus and Paid Parental Leave (PPL) schemes have reaffirmed the need for expecting parents to prioritise taking good care of their savings account – or opening one up in the first place!

Whether you’ve got a few little ones already, have one on the way or are planning on starting a family in the future, having a sturdy savings account will be more important than ever.

Abolishing the Baby Bonus

The Baby Bonus scheme has been permanently replaced by the Family Tax Benefit Part A (FTB-A) on March 1 this year.

Families with children born or adopted before this date are still eligible for the Baby Bonus, as long as they make their claim within 52 weeks of this event. They must not have received PPL, and the parents’ combined income must measure under $75,000 in the 6 months after a child is born to be eligible. The program allocates up to $5000 per child.

Those whose children only came along after this date have a lot less to play with under the new FTB-A. Through this scheme, parents receive $2000 for their first child and – a $500 first payment, and the rest paid fortnightly over three months. They will receive $1,000 for each subsequent child following their first.

Changing Paid Parental Leave

You might already be familiar with PPL, but this could see a change in the future. Currently, PPL grants 18 weeks of financial support to a child’s primary carer who makes less than $150,000 a year.

The government announced a new, expanded scheme last year, which promised birth mothers a full 26 weeks paid leave at whatever was greater – their full wage or the national minimum wage. The scheme would cost $6.1 billion a year, according to the government’s policy paper, and would start from July 1 2015.

The pay rate has since been capped back to $100,000 to keep costs down.

However, critics say that the plan will likely punish those on lower incomes as the much greater budgetary cost of the more generous new scheme will put disproportionate pressure on those in lower income brackets.

So while the extra eight weeks of paid leave could be a huge benefit to ordinary parents, depending on where your income bracket falls, it could well pay to keep a healthy savings account in your back pocket, just in case.

Disclaimer

This article is over two years old, last updated on June 16, 2014. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent savings accounts articles.