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‘Stapling’ Superannuation: What employers must know

Stapling Superannuation What employers must know

In the 2020-21 Federal Budget, the government announced the ‘Super Reforms – Your Future, Your Super’ measure. This requires employers to check Australian Tax Office (ATO) online records to confirm and pay super contributions into a new employee’s existing fund – ‘stapling’ the employee to their current super account. The only exceptions are where the employee:

  • nominates a super fund for contributions, or
  • does not have a ‘stapled’ fund and does not exercise choice – and the ATO approves contributions defaulting to the employer’s nominated default fund

The object of the ‘stapling’ reform is to reduce the number of Australians who end up with several super funds through their careers, as they change jobs. Often these unused accounts have small balances and incur individual fees – ultimately reducing overall retirement savings.

Key date and what actions employers need to take

The new member ‘stapling’ super legislation comes into effect on 1 November 2021. From this date, employers will need a manual process for HR/Payroll staff or an external, hired agent (contractor) to enter details for every new employee and perform a super check via ATO Online Services. Where the employee has a ‘stapled’ super account, the employer must pay super contributions into that account. If the employee does not have a ‘stapled’ super fund account, the ATO will advise if the employer’s default super fund can be used.

Phase 2 and automation via payroll

There is a second phase to this reform that the ATO indicates will come into force from 1 July 2022. This features an integrated wholesale service included in Australian tax and superannuation software. Australian providers such as Pronto Software can then enable solutions (Pronto Xi Payroll) to give employers the option to automate communications with the ATO. This would remove the need for employers to manually enter the super fund details of new employees into payroll systems, reducing business administration costs.

Organisations should consider the changes that come into effect this year and review how best to adapt their onboarding processes to comply with the legislation.

Additional resources

It may be helpful to review the following information provided by the ATO.

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