Account Stapling – A Your Future, Your Super reform
Snapshot
- Super legislation reforms were introduced by the Government under the Your Future Your Super package
- This includes ‘Account Stapling’, which commenced on 1 November 2021
- Account stapling means that a person will open a super account when they first start work and that account will follow them from job to job, unless they make another fund choice.
- There is an obligation on you as the employer to contact the ATO and determine the stapled Fund for each new employee, unless they complete and return a Choice of Fund form.
A number of new reforms to superannuation legislation were introduced by the Government under a package called Your Future Your Super. One of the key elements for you to be aware of as an employer is called ‘Account Stapling’, which commenced on 1 November 2021.
Let’s take a closer look at what account stapling means, and the changes to your employer super obligations as a result.
Understanding account stapling
The aim of stapling is to reduce the number of people holding multiple super accounts and having their super savings eroded by incurring multiple sets of fees and insurance premiums.
What it means is that a person will open a super account when they first begin work, and that account will follow them from job to job (ie. is stapled to them) unless they otherwise make a choice.
New starters to your business must still be provided with a Choice of Fund form where they can nominate their preferred super account or choose to join your default or preferred fund. An alternative to the standard Choice of Fund form is available for Nationwide Super employers – please contact your Business Development Manager for details or give us a call.
If the new starter does not complete and return a Choice of Fund form, you are obliged to identify their stapled fund by going to the Australian Taxation Office (ATO) Online Services.
The ATO will advise you if the person has a stapled fund for you to then pay contributions to. If there is no stapled fund you can pay contributions to your default fund.
Does stapling replace ‘Choice of fund’?
No, stapling is not a replacement for choice of fund. You are still obliged to provide a Choice of Fund form to your new employees (or an equivalent document), and they can nominate a preferred fund by completing and returning that form.
If you receive a completed Choice of Fund form, you must make super contributions for your employee to that chosen fund.
Does stapling override nominated funds in workplace determinations and enterprise agreements?
In short, yes. The Your Future Your Super legislation now makes clear that for employees starting employment on or after 1 July 2021, you can’t make contributions for them in accordance with a workplace determination or enterprise agreement made before 1 January 2021, and still comply with the Choice of Fund rules. The only exceptions will be that either the employee has specified that fund as their chosen fund, or they do not choose a fund and do not have a stapled fund.
How do I find out if my new employee has a stapled fund?
If your new employees do not nominate a fund using a Choice of Fund form, your administrative obligation is to contact the ATO to determine if the new starter has a stapled fund.
That means that you login to the ATO website using your business details where you can submit a request to receive details of the employee’s stapled fund. Importantly we understand you need to set up an employment record with the ATO before you can make a request for an employee.
Please visit the employer section of the Yoursuper.gov.au website for details of the process.
The ATO have also stated that the intention is for the manual search function to be replaced by an automated process linked to payroll systems that choose to offer that functionality at some point in the future.
What if the employee has more than one super account?
The ATO determines the stapled fund by following a set of prioritisation guidelines. These ‘tie-breaker’ rules consider things like the last account to receive a contribution, account balance and account creation dates.
There will only be one super account advised to you by the ATO as the stapled account.
What if an employee doesn’t have a stapled super account?
If an employee doesn’t have a stapled super account determined by the ATO, for instance if this is their first job ever, or first job in Australia – and they haven’t nominated a super account by completing and returning a Choice of Fund form to you, you must pay their super into your default fund.
Do I still need a default fund?
You will still need to choose a default fund in accordance with the relevant Modern Award for your business or industry.
If a new employee to your business hasn’t nominated a super account by completing and returning a choice of fund form, and doesn’t have a ‘stapled’ fund following a search of the new ATO tool, you need to pay their Super Guarantee contributions to your default fund.