Stapled super


4th August, 2021

How stapled super will change your business obligations

With new superannuation obligations in effect from November 2021, business owners need to be aware of the stapling measure and how it impacts HR and payroll processes.

In June, the ‘Your Future, Your Super’ reforms passed Parliament with some of the most significant changes since mandatory super was first established.

Most of the proposed changes came into effect from 1 July, except for ‘stapling’, which went live on 1 November 2021.

READ: ‘Your Future, Your Super’ reforms mean it’s time to update your onboarding process

What is ‘stapled’ super?

Stapled super is designed to protect employees from paying fees to multiple funds each time that they start a new job, and a default account is created for them where needed.

It means that an employee’s super will follow them each time they start a new job – that is, they will automatically keep their existing super fund where they have one, or opt to join the employer’s default fund otherwise.

The measure will allow employees to maximise their savings for retirement.

The elements in the Your Future, Your Super package are focused on making sure Australia’s superannuation system delivers better outcomes for members, with greater accountability and transparency, making it easier to choose a better fund.

Treasury estimates that the changes will save Australians more than $17 billion over 10 years.

But the stapling measure is the one that will require action from employers, so business owners need to understand what is required to stay compliant. And this will involve asking a new hire if they have an existing super fund (a stapled fund) as part of the onboarding processes.

What are the key things employers need to know?

Employers will need to make contributions in accordance with the revised stapling regime to meet their obligations under the Superannuation Guarantee (SG) legislation, explains Glen McCrea, chief policy officer of the Association of Superannuation Funds of Australia (ASFA).

This means if a contribution is not made to the correct fund, such as a choice fund or stapled fund (if they exist), then the contribution won’t count towards meeting the employer’s SG obligations.

And employers may be required to make a further contribution in order to meet their SG obligation.

“From 1 November, stapling will change how businesses onboard new employees,” said McCrea.

“Unless the employee exercises choice of fund, the employer will need to check with the ATO whether the new employee has a stapled fund.”

From there, employers must make SG contributions for new employees as follows:

  • If the employee nominates a super fund, then the employer must make SG contributions to the nominated fund
  • If the employee hasn’t notified their preferred super fund and has a stapled fund, then contributions must be made to the stapled fund
  • Only if the employee hasn’t made a decision regarding a super fund, and doesn’t have a stapled fund, can the employer make SG contributions to their default fund (as nominated in the Choice Form provided when the employee commences employment)

Can a business change to another default super fund?

“Under the stapling provisions, employers have the option to change to another default super fund,” said McCrea.

However, they need to ensure they contribute to an employee’s choice fund or existing stapled fund, and still need to check for these when onboarding new employees.

“If there’s neither a choice or stapled fund for the employee, then the business can make contributions to the new default fund.”

Modern onboarding solutions make stapled super easy

Employee management solutions like MYOB Team enable workers in small and medium businesses to submit or update their pay, tax and superannuation details, and is one way to eliminate the traditional paper trail and save time for small and medium business owners.

Bigger businesses can make use of MYOB Advanced Workforce Management functionality to ask new hires to choose a super fund or select their own. This enables employers to proactively capture this information and reduce admin required to confirm/check the employee’s super details.

The onboarding workflow also captures pay, tax and other key employment information to help build out the employee record.

READ: Deliver a great employee onboarding experience from Day One