With the new super stapling rule in effect from November 1, 2021, it’s important for employers to understand what this means and how to remain compliant.
A stapled super fund is an existing super fund that is linked, or ‘stapled’ to an individual employee and follows them as they change jobs. A stapled super aims to avoid having to open new super accounts each time an employee changes their job and, in turn, reduces account fees.
What does this mean for employers? As of 1 November 2021, employers can no longer choose a default super fund for their new employees without checking with the individual employee or the ATO first. Prior to this rule coming into effect, an employer was able to create a new super account with the business’ default fund if a new employee did not provide their super fund details. As of 1 November 2021, if an employer does not meet the employee’s choice of super fund, penalties may be applied.
How Does It Work?
Upon hiring a new employee, employers will need to consider an extra step when determining where super contributions will need to be paid.
Employers will need to request stapled super fund details from all new employees who start after 1 November 2021 when:
- They need to make super guarantee payments for the employee
- The employee is eligible to choose a super fund but didn’t
- This includes contractors who are considered employees for super guarantee purposes.
Employers may need to request stapled super fund details for some employees who aren’t eligible to choose their own super funds, including:
- Temporary residents
- Those covered by an enterprise agreement or workplace determination made prior to 1 January 2021
If a new employee chooses an existing super fund, or chooses the business’s default fund, an employer does not need to request stapled super fund details for the employee. If an employee cannot provide super fund details, an employer will need to request this information from the ATO.
The Next Steps
Stapled super fund details can be requested via the ATO’s online services, making it a convenient way for employers to ensure all super contributions are compliant with the new rule in place. By requesting these fund details, an employer will need to ensure that they have offered all eligible employees a choice of super fund. Additionally, the ATO will also need to confirm an employment relationship exists prior to providing the information.
Once an employee has notified the business of their choice of super fund, an employer has two months to start contributing to that fund. If an employer has received a choice of super fund form from a new employee from 1 November 2021, and a contribution must be made before this time, it should be paid into the employee’s choice fund or alternatively into the stapled super fund if applicable. If the ATO has advised no stapled super fund is available, contributions should be made into the nominated account of the business.
Hoffman Kelly is here to help ensure that you as an employer understand the obligations and requirements of the change in super fund contributions in light of the newly implemented rule. Contact us today to talk to our expert team about super stapling and what it means for you.