Super stapling: your obligations

On 1 November 2021, the Commonwealth Government’s new ‘super stapling’ rules will apply. We explain what they are and what you’ll need to do to comply with them.

What is super stapling?

Super stapling is the concept that someone’s super fund becomes stapled to them when they move employers.

Now, when an employee joins an employer and doesn’t nominate a super fund for their super contributions, the employer can choose a default MySuper product. These are basic products offered by many super funds which tend to offer low fees and limited investments.

While MySuper products have tended to perform well, the government is concerned that the current system leads people to end up with multiple funds and low balances. These savings then get gradually eaten away by fees.

As a result, the super stapling laws say that an employee’s existing super fund should now come with them to the new employer unless they nominate a different fund.

Employees do this by checking a box about their preferred super fund on the ATO’s Superannuation standard choice form. Employers need to provide them as part of the onboarding process.

What you need to do to comply with super stapling rules

To comply with the new super stapling rules, you need to check if a new employee has an existing stapled super fund even where they don’t nominate any fund themselves. You can do this through the ATO website.

If you find the employee has a stapled fund, you’ll need to make any compulsory super contributions into it.  There will only ever be one stapled fund, even where an employee already has multiple super accounts.

The new rules don’t apply to any employees who began working with you before 1 November 2021. Just new ones.

Clashes with Awards and Agreements

Many Awards and Agreements provide for super contributions to be made into a specific fund. If you automatically pay into this and not the stapled super fund, you could be breaching your Superannuation Guarantee obligations.

There are, however, some exceptions to this general rule. For instance, employees covered by Enterprise Agreements and Workplace Determinations made before 1 January 2021 may need to be given a choice of funds.

Other things to be aware of

At times, a super fund may not accept contributions. Where this happens, you need to proactively identify any rejected contributions. After all, you’ll still be in breach of your super obligations if you don’t contribute on your employee’s behalf. While the ATO has the discretion to override this, it won’t necessarily do so.

You should also consider whether you need to change your default super arrangements. This is because super stapling could impact any participation agreements you have with existing funds, especially when it comes to discounted rates.

It also pays to remember that these rules apply to any contractors who fall under the super guarantee laws too. For example, those who contract to supply their labour.

Want to talk to a HR specialist?

If you’d like to know more about how the super stapling rules apply to your workforce, get in touch.