Super Stapling

Super

On 1 November 2021, the Federal Government’s stapled super regime came into effect. This measure aims to reduce the multiple superannuation accounts that individuals acquire during their working life. If your employee chooses their own super fund or chooses your employer default fund, you do not need to request stapled super fund details for them.

What does stapling mean?

Under the old regime, if an employee commenced at an organisation and did not nominate a superfund to pay into, the employer could make contributions to a default fund nominated by the employer. Typically, this resulted in employees having different super fund accounts at each organisation they worked for.

From 1 November 2021, when a person moves jobs their existing superannuation account will be ‘stapled’ to them unless they nominate a different fund.

The system was created to address eroding retirement savings for Australians, as a result of many individuals having multiple super fund accounts that attract fees. The ATO estimates that there are approximately 6 million unintended accounts in the super system charging $450 million in fees. In addressing this, Treasury has estimated that stapling will result in $2.8 billion in savings over 10 years.

How will this affect employers and the onboarding process?

This regime does not affect any existing employees who commenced before 1 November 2021.

When an employee onboards with your company, they need to complete the ATO Superannuation Standard Choice form, found here.

If your employee makes a super choice (either to their existing account or the employee default fund), submit it to your payroll team. The employee’s choice will always override stapling, so if the employee makes a choice, then employers do not need to verify details with the ATO.

If your employee does not make a super choice, you will need to identify if they have a stapled fund with the ATO (see steps below). If they have a stapled fund, pay into the account details provided by the ATO. If they do not have a stapled fund, pay super into the business’s default fund.

Note there are specific stapling super rules for certain industrial instruments, which are important to review or seek legal advice on if you’re unsure.

How to request stapled super fund details?

To request a stapled super fund, you, or your authorised representative, need to:

  1. Log into the ATO online services portal;
  2. Navigate to the ‘Employee super account’ screen via the ‘Employees’ menu and select ‘Request’ to open the form;
  3. Enter your employee’s details;
  4. Read and click the declaration to sign it; and
  5. Submit your request. You should receive a response almost immediately with the stapled super account details.

There is no limit to the number of requests you can make. However, a bulk request form is available when requesting multiple employees’ stapled super fund details.

You must pay super guarantee contributions to the stapled super fund account provided by the ATO.

Quick Guide for Employers

For employees who commence with an employer prior to 1 November 2021:

  1. Has the employee chosen their preferred super fund?
    • Yes – Pay into the chosen fund
    • No – Go to the next question
  2. Is the employee subject to an EBA or modern award that stipulates a fund?
    • Yes – Pay into the prescribed fund
    • No – Pay into the employer default fund.

For employees who commence with an employer on or after 1 November 2021:

  1. Has the employee chosen their preferred super fund?
    • Yes – Pay into the chosen fund
    • No – Go to the next question
  2. Does the employee have a stapled fund?
    • Yes – Pay into the stapled fund
    • No – Go to the next question
  3. Is the employee subject to an EBA or modern award that stipulates a fund?
    • Yes – Pay into the prescribed fund
    • No – Pay into the employer default fund.

When a person moves jobs their existing superannuation account will be ‘stapled’ to them unless they nominate a different fund.

What are the legal implications of this regime?

The ATO has said it will help and support employers during this initial period.

However, if employers haven’t made a request when they should there may be a choice shortfall penalty. To avoid the choice shortfall penalty, make sure you:

  • Request the stapled super fund details for your employee as soon as possible if they have not provided you with their choice of fund;

  • Pay the employee’s full super guarantee contribution to the stapled super fund the ATO provide you details of; and

  • Pay the contribution to the stapled super fund by the due date.

How can we help?

Given this change in the super fund process, we would be more than happy to answer any questions that you may have or assist with implementation when the time comes.

As is evident from the above, this is a new area of the law, which continues to evolve and develop as the system is enacted. We will be sure to keep you updated regarding any new developments in this area.

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