This November, the superannuation experience is set to improve for millions of Australians. How? The way you onboard employees and set up their funds will change with super stapling, a government initiative that’s part of the broader Your Future Your Super (YFYS) reforms. This addresses the common problem of holding multiple super accounts and the hefty fees that result – with Australians charged $30 billion each year. Instead, employees will have a ‘stapled’ account that follows them as they change jobs, leading to less account duplication, lower fees, and a positive impact on their future super balance.
Employers, however, will need to be across what super stapling means for them. With the busy holiday hiring season soon upon us, take a moment to familiarise yourself with what’s new for super. Here’s what you need to know and how to get ready.
Remind me how superannuation usually works again?
Most small businesses who pay staff are familiar with how to set up and pay superannuation, or super, Australia’s compulsory retirement savings program. Usually, a new employee either shares the details of their existing fund via the super choice form or they elect to use the default fund for your business. However, there will soon be a third part to this process with super stapling.
So, what is super stapling?
A stapled super fund is an existing super account which is linked – or ‘stapled’ – to an individual employee and follows them as they change jobs. The introduction of super stapling by the ATO means working Australians will be attached to one super fund for life unless they choose otherwise. This is designed to reduce the number of super accounts people may collect throughout their working life and maximise retirement savings.
When will it start?
Super stapling commences from 1 November 2021. This means that if a new employee starts either on or after that date and does not nominate a fund by completing a Superannuation Standard Choice form, employers will then have to search for the employee’s ‘stapled’ fund using ATO services.
Why is this being introduced?
The current superannuation system has resulted in an estimated six million unintended multiple accounts which can be a big drain on members’ superannuation savings. You might be one of the millions of Australians who has consolidated their super or discovered a lost account in the past. This change aims to minimise the chances of ending up with duplicate accounts and the fees that come with them.
How can I find and use the stapled super information?
Super stapling will mean adding an extra step in your onboarding process – this will be when you check for a new employees’ stapled account if they haven’t nominated their own. How?
- The ATO has created a directory via ATO Online Services.
- After logging in, you’ll need to enter details such as an employees’ TFN, full name, date of birth and address to then receive the details on their stapled fund.
- If the ATO search returns a stapled fund account for your new employee, you’ll need to set this up as normal within Xero and use it for their super guarantee and any salary sacrifice payments.
Should I make any other changes to my onboarding process?
With the busy holiday season almost upon us, it’s worth reviewing your existing onboarding process so you’re ready to go when the change starts. If a new employee hasn’t completed a Superannuation Standard Choice form, employers will need to have their details (including TFN) to find their stapled super account. Does your current process get you all the paperwork and information you need in time? Consider if this needs to be updated (take a look at our employee onboarding guide for inspiration).
What about my default fund?
This process only affects new employees, so anyone in the team who already uses your default fund will stay the same. If the ATO advises that there is no stapled super fund for a new employee, you will be able to make contributions to your default super fund (unless they fall under an EBA or award with a mandatory fund). This is more likely to occur for people who have never had super before, like young people entering the workforce or someone who has moved from overseas.
What are the other changes coming to superannuation?
Super stapling is part of the broader Your Future Your Super reform which intends to improve the transparency, efficiency and accountability of the industry as a whole. Beyond super stapling, some of the other changes include:
- Super funds will be subject to an annual performance test by APRA and may be unable to accept new members if they fail
- The ATO will create a new interactive online YourSuper Comparison Tool to help consumers understand if their fund is underperforming.
Where can I find more information?
The ATO has more details available on super stapling for employers. Keep an eye out for future updates from Xero too, as we’ll continue to let you know of any changes coming.