The New Stapled Superannuation rules
As of July ‘21 The new Australian Government Your Future, Your Super regulations (YFYS) reforms came into effect. This new reform was created to start helping Australians save more super in time for retirement and to ensure the ever-growing superannuation industry starts to improve its accountability.
The Treasury recently estimated that via the new stapling requirements, Australians are forecasted across the next 10 years to save an estimated $2.8 billion due to fewer people paying less fees and premiums to multiple (often unknown) super funds.
Of course, with any new super rules, there are new requirements for employees.
Lucky for our fellow employers, this blog covers everything you need to know!
What is stapled super?
'Super stapling' is part of a new package of reforms to the superannuation system announced in the 2020 Federal Budget. It's aimed at tackling the problem of unintended, multiple accounts eroding the retirement savings of Australians (and going straight into superannuation’s companies pockets). The ATO recently estimated that there are approximately a massive 6 million unintended multiple accounts in the super system charging $450 million per year in fees. The new YFYS reform will aid all new employees to no longer rack up multiple super accounts but rather, have their latest employee contributions be “stapled” to their most recently used super account.
Up until November 21:
Under the current ‘default’ superannuation system, when an employee is on boarded to a new job with a new employer, a super form is required to be filled and lodged. If the new employee does not choose a superannuation fund for their super contributions to be paid into, their contributions are automatically paid to a default ‘MySuper’ product selected by their new employer. This essentially means that any person who changes jobs and does not exercise choice of fund AKA sharing their current choice of super, they will typically have more than one superannuation account, as chances are, their new employer will select an entirely different super to their current ones.
As of November 21:
Under the ‘super stapling’ reforms, any person who moves jobs and commences new employment will have their existing superannuation account ‘stapled’ to them, meaning that their new employer must pay contributions into the ‘stapled fund’, unless the member actively requests for their contributions to go into a different fund.
The New Super Rules
From the 1st of November 2021 onward, all Australian employers will now need to change their onboarding and payroll processes to comply with the new ‘super stapling’ requirements.
When you hire a new employee, you must still offer them a super choice fund form. If the employee does not return the form with their preferred super fund, then you will then need to log into the Australian Taxation Office (ATO) database to determine their stapled super fund details.
Employer Questions Answered
How do I work out if an employee has a stapled fund?
Employers will need to log into ATO online services and enter the relevant employee details to request information on the employee's stapled fund. An employer will need to have lodged either a Single Touch Payroll event or a Tax file number declaration for the employee to make the request (bulk requests can be made if you have over 100 new employees starting at once (this may be relevant for those acquiring a new business).
What if the employee already has multiple super accounts?
The good news is that neither the employer or employee has a role in determining which superannuation account is the employee’s stapled fund. The ATO is required to determine this, applying certain ‘tiebreaker’ rules set out in the legislation. Generally, the stapled fund will be the fund that the employee last received contributions into, but this will not always be the case. Importantly, employers must ensure they always check the ATO portal to determine which fund is the employee’s stapled fund and not rely on other information (such as the employee telling the employer which fund they think is their stapled fund).
If an employee uses the Standard Choice Form to choose a fund, is an employer required to request stapled fund details from the ATO?
No. If an employee exercises choice of fund, an employer has no obligation to request details of their stapled fund from the ATO.
Do I need to make changes to my employment contracts?
Yes, for new employees commencing on or after 1 November 2021. Current superannuation clauses will need to be updated to refer to the possibility of contributions being made into an employee's stapled fund.
Employee Questions Answered
What does this mean for Employees?
For employees, this means that when you change jobs in future, your super fund contributions will be sent to the Super account that the ATO deems as most suitable. Generally, this will more than likely be the fund used at your previous job, unless you actively request your employer to make a change. In the case of never having a super account before, you will need to choose one, or your employer will create an account for you with their default fund. If that’s you, try doing a little research first to choose a super appropriate for you.
I’m an existing employee, am I affected?
No, the stapled fund rules only apply to new employees who commence work on or after 1st of November 2021. Whichever fund your current employee is using to send super contributions will remain the same.
What happens at my next new job?
Unless you actively request for your new employer to send Super contributions to a new or specific fund, they will follow the Stapled Super regulations, accessing your details via the ATO which will provide them the stapled super details.
If in doubt, check the ATO
As always, if ever you’re confused or in doubt, check the Australian Tax Office for detailed information and direct contact to the ATO for both employee and employer information.
Ask your bookkeeper
Any Australian registered bookkeeper (like us) are legally required to know the latest government regulations for compliance. One of the many amazing benefits of having a trusted bookkeeper that knows your business is that they can (and should) provide you with new and relevant information specific to your business type!
Ready to start managing your business bookkeeping better? Give us a call 😉