In the 2021 – 2022 Federal budget, the Australian Government announced a set of reforms to the superannuation system aimed at increasing retirement savings and targeting unnecessary fees.
On top of increasing the super guarantee from 9.5 to 10% in July 2021, the recent “Your Future, Your Super” federal government measures also introduced the concept of “super stapling”.
To streamline the superannuation process, “super stapling” will essentially protect employees from wasting or losing super.
From the 1st of November 2021, Australian employers have new obligations to comply with when onboarding new employees.
But before we delve more into that, let’s start by clarifying…
What is super stapling?
The introduction of super stapling means working Australians will be attached, or “stapled”, to one super fund for life unless they choose otherwise.
The measure aims to reduce the number of super accounts people may acquire throughout their working life. Consequently, these new measures will also reduce excess account fees & insurance premiums by stopping new super accounts from being opened every time an employee starts a new job.
How does super stapling impact employers?
Existing employees are unlikely to be affected by these changes. Employers will continue making compulsory Super Guarantee payments (SG) into the same super fund accounts.
However, it will change what businesses need to do when hiring and onboarding new employees.
Under stapling requirements, when a new employee starts their job, the employer must pay eligible super contributions into their existing superannuation fund if they have one, or another fund they have selected.
If the employee doesn’t nominate a super account when they start a new job, the employer pays their superannuation contributions into their existing ‘stapled’ fund.
Employers will need to obtain the information about an employee’s existing superannuation fund from the ATO.
The employer does this by logging onto ATO online services and entering the employee’s details. Once an account has been selected, the employer then pays superannuation contributions into the employee’s identified super account.
Only if the employee does not have an existing superannuation account, and does not make a decision regarding a fund, will the employer pay their super into the employer’s nominated default superannuation fund.
Please note, if you don’t meet your choice of super fund obligations, additional penalties may apply.
A checklist for onboarding new starters.
1. Offer new starters an ATO Choice of Superannuation (Super) Fund choice form as the first step in your onboarding process and encourage them to consider which fund may be right for them. If your employee makes a super choice, have them submit it to your HR/payroll team.
2. If your new starter doesn’t choose a super fund when they start employment, you’ll need to check whether they have a ‘stapled’ fund with the ATO. To identify the super fund your new starter is ‘stapled’ to, refer to the ATO’s Request stapled super fund webpage for details.
3. If they have a stapled fund, pay their super into it. If they don’t, pay super into your business’s default fund or the fund named in the employee’s enterprise bargaining agreement (EBA).
To make sure you’re ready to request stapled super fund details, check and update the access levels of your authorised representatives in ATO online services. This will also protect your employees’ personal information.
Make sure to also check out the following ATO resources:
Before you make a request
Before you can request details of an employee’s stapled super fund, you must have lodged either a:
– Single Touch Payroll event
– Tax file number (TFN) declaration
How to make a request
To make a request from the 1st of November 2021 you, or your authorised representative, need to:
1. Log into ATO online services.
2. Navigate to the Employee super account from the Employees menu and select Request to open the form.
3. Enter your employee’s details, including their:
– TFN – an exemption code can be entered where an employee cannot provide their TFN, but this could result in processing delays
– full name – including ‘other given name’ if known
– date of birth
– address (residential or postal), if TFN not given.
4. Read and accept the declaration. At this point you also have the option to request stapled super fund for additional employees.
5. Submit your request. The response will appear on-screen in few minutes. The ATO will notify your employee of the stapled super fund request and the fund details they have provided.
A bulk request form will be available if you need to request stapled super fund details for over 100 new employees at once.
As an employer, you now have a new / extra step you may need to undertake before proceeding to fulfil your super obligations.
To comply with this new regulation, you will need to login to ATO online services to retrieve stapled super information and update your employee profiles in your payroll / hr software.
It’s also important to highlight that employers cannot provide recommendations or advice about which super fund employees should choose, their level of super contributions or consolidating their super unless they are licensed by the Australian Securities & Investments Commission (ASIC) to provide financial advice.
If your employees are seeking advice about comparing and choosing super funds they can visit the following dedicated ASIC website or use the YourSuper comparison tool. Everyone’s situation is different – we recommend employees seek independent financial advice about super matters specific to their personal circumstances.
Disclaimer: The information provided in this article is general in nature and is not intended to substitute professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact us for advice.