What is Super Stapling?
Super stapling was introduced as part of a package of superannuation reforms announced in the 2020 Federal Budget that came into effect on November 1, 2021. Under the previous ‘default’ superannuation system when an employee started working for a business and they did not select a super fund, their contributions would be paid into a default fund selected by the employer. This resulted in a large number of Australians that moved between jobs having multiple super funds with multiple sets of fees, potentially eroding their retirement income. The ATO estimates that there are approximately 6 million accounts that are unintended multiples collecting around $450 Million annually in fees.
With the new ‘Super Stapling’ function, an employee’s super fund will be ‘stapled’ to them. During the onboarding process if the employee doesn’t specify an existing super fund the employer will need to log into the ATO and look up that employee’s details and see if they have an existing fund ensure that employees contributions are paid into that fund.
Athena Koelmeyer, Principal of employment law firm Workplace Law says that the additional step for employers when onboarding new employees is “absolutely the key to compliance with these new rules”.
How does Super Stapling Work?
“If any employee doesn’t actively choose a super fund on employment, it is no longer permitted for the employer to simply put them into a default fund”, says Koelmeyer. “Employers are now obliged to do more, by logging into the ATO and identifying the employee’s stapled fund”.
Of course, if the employee does nominate a fund on commencement, the employer doesn’t need to identify the stapled fund.
Employers can still offer or their default fund, but can’t compel a new employee to choose it.
If an employee doesn’t select a super fund, with their consent, you can request the employee’s stapled super fund details from the ATO after submitting a Tax File Declaration or a Single Touch Payroll pay event – demonstrating an employment relationship.
Once this request is filled, you and the employee will be notified of the request, and the details released.
If the identified stapled fund does not accept contributions, another request can be made. If after further requests, there is no alternative fund available, the ATO can advise whether contributions can be made to the employer’s original default fund or another fund that meets the choice of fund rules.
“All of this means potentially more work for employer’s recruitment and payroll teams ”, Koelmeyer says. “If new employees don’t provide their super details during the onboarding process the onus sits on the employer to then take that extra step seek out these details through the ATO.”
Super stapling should improve retirement outcomes for all employees
25% of Australians have more than one Superannuation Fund, each with associated fees and administration costs. Often, these fees can heavily erode into retirement savings – people lose track of multiple accounts making them easy to become forgotten and lost.
More than a third of all super accounts are unintended multiples, opened by default when an employee changes jobs. These unnecessary accounts cost more than $1.9 billion each year in excess insurance premiums, and $690 million in excess administration fees – figures that result in a full-time worker being up to 6% (or $51,000) worse off at retirement.
Super stapling has been introduced to help prevent lost and multiple superannuation accounts, which cost workers and retirees unnecessary fees, ultimately impacting on retirement welfare and the benefits of the superannuation scheme itself.
How Humanforce can help
At Humanforce our onboarding solution can help take the headache out of capturing new employees’ super details. When using Humanforce onboarding new employees will be presented with a superannuation screen that requires them to input their exist super fund details or select a new fund.
That means that every time a new staff member is onboarded they will have to provide these important details to the payroll team before their first shift. This should mean that payroll never has to engage with the ATO because an employee will either provide details or actively select their own fund on recruitment.
Onboarding via our mobile app also streamlines the process to get new hires up and running, creating a positive experience that leads to improved retention rates. Managers can submit forms directly to the ATO after approving information uploaded by new hires, reducing the risk of errors in manual process, and eliminating the need for paper forms.
Click here to find out more about Humanforce Onboarding and how it can help streamline the employee experience for new hires.