What is Super Stapling?
Under the current ‘default’ superannuation system, where an employee commences employment with a new employer and does not choose a superannuation fund into which their super contributions will be paid, their contributions are paid to a default ‘MySuper’ product selected by their employer. This means that a person who changes jobs and does not exercise choice of fund will typically have more than one superannuation account.
However, under the ‘super stapling’ reforms, where a person moves jobs their existing superannuation account will be ‘stapled’ to them, meaning that their new employer must pay contributions into the ‘stapled fund’ unless the member chooses for their contributions to go to a different fund.
‘Super stapling’ is part of a package of reforms to the superannuation system announced in the 2020 Federal Budget and are aimed at tackling the problem of unintended multiple accounts eroding the retirement savings of Australians. The ATO estimates that there are approximately 6 million unintended multiple accounts in the super system charging $450 million in fees.
What does this mean for employers?
When a new employee commences on or after 1 November 2021, and they do not exercise choice of fund, the employer will need to check if the employee has an existing stapled fund. This is done by logging into ATO online services and providing some basic information about the employee.
Generally, if the employee does not exercise choice and has a stapled fund, the employer will be required to contribute to the employee’s stapled fund to meet their Superannuation Guarantee (SG) obligations.
Are existing employees affected?
No, the stapled fund rules only apply to new employees who commence work on or after 1 November 2021.
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 (eg this might be relevant where 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.
What about contractors?
These rules will apply equally to a person who works under a contract that is wholly or principally for the supply of their labour – in this case, the person is considered and treated like an employee under the SG regime.
What if a stapled fund does not accept a contribution?
This is a particularly tricky issue. As a starting point, if a stapled fund rejects a contribution, the employer will be taken not to have satisfied their SG obligations. The ATO has discretion to reduce an employer’s individual superannuation guarantee shortfall in these cases but this discretion is not automatically applied and may not be applied at all if the employer does not pay the rejected contribution to another fund in a timely manner. Employers will need to ensure that they have processes to identify rejected contributions and act on them promptly.
How do I request an employees stapled fund details?
To request stapled super fund details, you, and any authorised representatives you have nominated in Access Manager must have the correct access levels to access this information on the ATO online portals. You must have also lodged either a Single Touch Payroll event or Tax file declaration with the ATO for the employee. When you make a request for the stapled super fund details you do so by logging onto the ATO online services and providing the following details of the individual you are requesting the details for.
- Their TFN (Tax File Number)
- Full name – including ‘other given name’ if known
- Date of birth
If you have correctly provided the above information, you will receive an on-screen response with the details of the employees stapled super fund to which you are to make the contributions to.
If you do not give your eligible employees a choice of super fund you could receive a ‘choice liability’ penalty, which applies if you;
- Do not give your employee a Superannuation standard choice form within the required timeframe (within 28 days of their start date)
- Pay your employee’s super to a complying fund but not the fund they chose
- Charge the employee a fee for implementing their choice of fund.
Are you ‘super staple’ ready?
If you are not sure as to whether you are super staple ready or if you have access to the ATO online portals that will provide you with new employees stapled fund details, then check with the ATO Extra ‘super’ step when hiring new employees or call Mandie Colledge from Accura Accounting & Advisory on 9387 0000 for an assessment of your Super Stapling readiness.