If you’re unfamiliar with the term, super stapling simply means employees keep their existing super fund when they change jobs. So when moving to a new employer, an employee doesn’t need to switch to a new super fund unless they choose a new fund.
Why super stapling?
Many Australians had more than one superannuation account due to changing jobs. When starting new employment, they would be enrolled in the employer’s preferred fund while still having another fund. Having more than one super fund resulted in paying multiple sets of fees, reducing retirement balances. People who changed jobs several times over the years could have multiple accounts which were no longer receiving super contributions but still attracted fees.
Stapling came into effect on 1 November 2021 as part of the Federal Government’s Your Future, Your Super reforms and applies to new employees starting after that date. This applies to all new employees – full-time, part-time and casual – who are eligible to receive superannuation contributions unless a state or industrial award prescribes where super must be paid. Stapling won’t change any arrangements for employees who started before 1 November 2021.
Stapling aims to reduce the number of super accounts Australians accrue during their working lives and the associated fees. There was an introductory period from 1 November 2021 to 31 October 2022. During this time, the ATO reduced or eliminated fines for businesses making reasonable attempts to comply with the new requirements.
How does super stapling affect businesses?
Businesses play a key role in super stapling. When you hire a new employee, who doesn’t nominate a super fund, you must check if they have an existing superannuation account before signing them up to the company’s default account. This has changed the onboarding process for new employees in the following ways.
First step: If a new employee chooses their existing eligible super fund, you must pay super guarantee contributions into that fund. To facilitate the process, businesses can provide an ATO Superannuation Standard Choice form as part of the onboarding process.
Second step: If a new employee does not choose an eligible fund, you must search to see if the new employee has an existing super fund. This can be done using ATO online services.
If they have an existing super fund, your business must pay super contributions to this fund. This can only occur after the employee has started working and the business has submitted a Tax File Declaration form or a Single Touch Payroll (STP) event linking the employee to the business.
For more information on this step, visit the ATO’s Stapled Super Funds for Employers page.
Third step: If the employee doesn’t choose a super fund and your ATO online services search reveals they don’t have an existing super fund, your business will pay super contributions into its default super fund.
How to request a new employee’s stapled fund from the ATO
If a new employee does not choose their own super fund, then you’re on to the second step, which includes logging in to ATO online services for business and entering the employee’s details (full name, TFN, date of birth and address). The ATO online system will provide an onscreen response within a few minutes.
For stapled super fund requests for more than 100 new employees at once, you can complete a bulk request form (xls or xlsx files) and get a response within 14 business days.
As with individual employees, you will need to show an employment relationship with a Tax File Number Declaration form or an STP pay event linking the employee to your business.
The ATO announced it was releasing a solution enabling stapled super fund requests from within employer software and payroll products. This solution was released in December 2022 and will be incorporated by software providers. This will eliminate the need for requests for stapled funds from the ATO. For updates on when the service will be available, check with your software provider.
Update documentation to reflect the new process
With this new stapled superannuation process, your existing employment documentation, including contracts, might need to be updated for new employees. This includes mentioning the possibility that superannuation contributions will be made into the employee’s stapled fund.
Assistance with keeping up with changes
Stapled super funds are one example of the constant changes business owners face. If you need assistance with this issue or other accounting and business support, the team at Equil Advisory is ready to assist.
Get in touch to find out how we can help your business.
