What stapling means for you and your employees
28 May 2021
For the first time, your employees’ super fund will follow them when they change jobs.
'Stapling' is an Australian Government superannuation reform that will be introduced from 1 November 2021.1
This means your employee will keep their super fund when they start their new job, because it will be 'stapled' to them.
Why is stapling being introduced?
The Australian Government says stapling is aimed at stopping the creation of multiple unintended super accounts and the erosion of super balances.2
It aims to stop people’s retirement savings being eaten away by duplicate fees and insurance premiums on multiple unintended accounts.
Stapling means that employers will pay a new employee’s Superannuation Guarantee contributions into their existing super account rather than creating a new one for them.
What is the problem with multiple super accounts with different funds?
An employee may have multiple unintended accounts because they have previously changed jobs and did not nominate a superannuation fund.
Under Australia’s current compulsory superannuation system, when this happens, the new employer is obligated to nominate a superannuation fund on a new employee’s behalf, if the individual does not nominate a fund.
If the employee did not choose their own fund, the employer has been required to have a ‘default’ fund that they paid the employee’s compulsory contributions into.
If that employee changed jobs multiple times over their working life, and did not ever nominate a superannuation fund, they could end up with multiple superannuation accounts with different funds, all charging separate fees and insurance premiums.
Latest ATO figures3 shows there are around 6 million multiple accounts held by 4.4 million Australians. These multiple accounts charge $450 million in fees a year.
The Government says stapling should result in 2.1 million fewer unintended multiple super accounts over the next 10 years and boost balances in super by about $2.8 billion by avoiding duplicate fees and lost returns.
What stapling means for employers
Under stapling requirements, when a new employee starts their job, the employer must pay eligible super contributions into their existing superannuation fund if they have one, or another fund they have selected.
If the employee doesn’t nominate a super account when they start a new job, the employer pays their superannuation contributions into their existing ‘stapled’ fund.
Employers obtain the information about an employee’s existing superannuation fund from the ATO.
The employer does this by logging onto ATO online services and entering the employee’s details. Once an account has been selected, the employer then pays superannuation contributions into the employee’s identified super account.
Only if the employee does not have an existing superannuation account, and does not make a decision regarding a fund, will the employer pay their super into the employer’s nominated default superannuation fund.
The ATO will release more information closer to 1 November to help employers understand these changes and meet their obligations.
1. Received Assent on 22 June 2021. Source: Treasury Laws Amendment (Your Future, Your Super) Bill 2021 – Parliament of Australia (aph.gov.au).
2. Australian Treasury, October 2020, Your Future, Your Super, accessed 23 April 2021, at treasury.gov.au
3. Australian Taxation Office, 18 March 2021, Super data: multiple accounts, lost and unclaimed super, accessed 23 April 2021 at ato.gov.au