What is stapling?
In the 2020 Federal Budget, the government announced a package of reforms designed to ensure the superannuation system delivers better outcomes for members, known as the Your Future, Your Super package (or simply YFYS). A key reform in the package is the introduction of a Single Default Account, referred to as ‘stapling’.
A stapled super fund is an existing super account which is linked, or ‘stapled', to an employee so that it follows them as they change jobs. The government’s aim with this reform is to reduce the creation of unnecessary superannuation accounts which can erode an individual’s total superannuation balance through paying multiple sets of fees and costs.
The new stapling obligations mean that where an employee does not make a choice of superannuation fund, their employer will be required to search for their existing (stapled) fund using the ATO Request Stapled Fund Online Service and direct contributions to that fund.
It's important to note that if an employee does advise the employer of their choice of superannuation fund, the employer is not required to contact the ATO to confirm the new employee’s stapled fund.
Key information snapshot
|When is the change occurring?||Stapling obligations took effect from 1 November 2021.|
|What happens if I have a new employee start with my business on or after 1 November 2021?||To meet the new stapling obligations, you will be required to search for that employee’s existing (stapled) fund using the ATO Request Stapled Fund Online Service and direct contributions to that fund if the employee does not provide you with a choice of super fund election.|
|What about existing employees on 1 November 2021?||No action is required on your part for existing employees. The new stapling obligations will only exist for any future employees.|
|I have more than 100 new employees to process?||Contact the ATO for bulk upload instructions|
|What happens if a new employee makes a choice of super fund via an ATO Superannuation standard choice form?||You are obligated to make contributions to the employee’s chosen fund and are not required to contact the ATO to confirm their stapled fund.|
|What if the new starter does not have a stapled fund after an ATO search?||Where an employee does not make a choice of superannuation fund and the ATO advises there is no stapled fund, employers can make superannuation contributions into their default fund.|
For more detail on the new stapling obligations, please see the below resources:
- View our infographic – a diagram that explains how the new stapling rules apply to new employees and existing employees from 1 November 2021.
How you can help your employees achieve their dream retirement
While stapling may prevent the creation of multiple accounts, in some cases the stapled fund may not be in an employee’s best interests, or it could be timely that they review their current stapled fund. An employee's stapled fund may have higher fees and costs, not have adequate insurance cover or they could be paying more for cover than they otherwise would. The stapled fund may have also failed APRA’s Performance Test – an annual test of MySuper products that compares:
- the average investment return achieved by the fund (net of investment and administration fees and costs) over a 7-year period
- with the return that could have been achieved if the fund had invested in benchmark products set by APRA (net of the median level of fees and costs) over that same period.
That's why it's important to share information about your default superannuation arrangements with new starters during the onboarding process and provide them with the ATO Superannuation standard choice form so they can make an informed choice about which preferred fund to nominate and where to invest their super. Remember, the new stapling obligations only apply in circumstances where a new employee does not make a choice of super fund.
We're here to help
If you have any questions or require further support to meet your stapling obligations, call us on 13 11 84.