Super Stapling - How it affects your business
Over the next ten years, Treasury estimates that reducing duplicate superannuation accounts will save Australians $2.8 billion.
The Australian superannuation system manages the retirement savings of 16 million Australians, making it the fourth largest in the world.
In retirement, superannuation will help many Australians enjoy a higher living standard. Many Australians will be let down by structural flaws within the system. Currently, Australian households pay $30 billion in superannuation fees (excluding insurance premiums). In comparison, Australian families spend $27 billion on energy bills and $12 billion on water bills.
Super stapling - what is it?
As part of The Your Future, Your Super reforms existing super funds will link to an individual's myGov record, so their superannuation remains with them when they change jobs - employees' super is 'stapled' to them as an individual when they change jobs.
Employees automatically enrol in one super fund from job to job unless they explicitly choose to join another. Previously contributions of an employee who changed jobs used to be automatically transferred to the super fund of their new employer unless they nominated another fund.
When did Super Stapling start?
From November 2021, employers must comply with the new super stapling requirements. Multiple superannuation accounts are common among employees, increasing account fees and affecting retirement balances.
How does Super Stapling work for people joining the workforce?
Everyone joining the workforce after 1 November 2021 will be 'stapled' to their first super fund. There is no minimum age to start contributing to a superfund or opening a superfund account.
Employer Superfund contributions
From 1 November 2021, employers need to make super guarantee (SG) contributions to an employee's stapled super fund unless the employee specifically requests a different account.
Find out if you have to pay super by visiting the ATO website - Super for Employers.
As an employer, what do I need to do for Super Stapling?
The ATO online services must be used when an employee does not nominate a super fund during the onboarding process. A stapled fund must be used for SG contributions if the employee has one. Employees who choose a different fund to receive their super must have their employer pay SG contributions to that fund. Contributions must be made to the employer's default MySuper fund if the employee does not have a stapled fund.
Super stapling and onboarding
Access payroll solutions have an in-built super selection as part of onboarding. New employees can nominate a company-nominated super fund, select a fund to which they already contribute, or have their employer confirm their stapled fund choice.
Requesting staple funds from the ATO is as simple as:
An employer can request an employee's staple fund when they have submitted an employee's tax file number declaration form, or a Single Touch Payroll (STP) pay event linking a new employee to the company.
An employee's authorised representative can request staple fund information via ATO's online services.
How to request staple fund information:
- Log in to ATO online services
- Enter the employee's details
- Get a response from the employee's super fund.
To request more than 100 new employees at once, employers must complete a bulk request form, send it to the ATO, and wait up to five days for the results.
Is super stapling applicable to existing employees?
Existing employees will not be affected by super stapling, and businesses must continue to pay SG contributions into their current funds.
What are the penalties for non-compliance with super stapling?
The ATO can impose penalties and fines if employers do not meet super stapling requirements. If penalties are incurred within the first 12 months (1 November 2021 to 31 October 2022), the ATO has advised they will be reduced if there is evidence of intention to comply.
Key takeaways:
Four key takeaways that the superannuation system is made better for members:
- Your superannuation follows you, preventing the creation of unintended multiple superannuation accounts.
- Empowering members by making it easier for you to choose a well-performing product that meets your needs.
- Holding funds to account for underperformance, protecting you from poor outcomes, and encouraging funds to lower costs and fees.
- Increasing transparency and accountability on the use of members' retirement savings by superannuation funds.
Download our Australian Superannuation changes guide to learn more.
