From 1 November 2021, employers need to ensure that their employee onboarding processes, payroll systems and contracts comply with the Government's new super stapling requirements. These new rules are aimed at reducing the number of superannuation accounts that are established each time an employee commences a new role.
What has changed?
Under the current regime, when a new employee commences, employers are required to offer its new employees with a choice of superannuation fund. Where an employee does not nominate a superannuation fund, the employer has the ability to pay super guarantee contributions on behalf of the employee into its chosen default superannuation fund.
From 1 November 2021, new legislation means that employees may carry with them a 'stapled' superannuation account – being an existing superannuation account that is stapled or linked to an employee and that the employee can continue to use if they change jobs.
So, from November, when a new employee has not exercised their choice of fund, employers will be required to contact the Australian Taxation Office (via online services), to confirm whether the employee has an existing 'stapled' fund. Where a stapled fund is identified, the super contributions must be paid into this fund, rather than the employer's 'default' superannuation fund.
How might this impact you? We have compiled a number of 'frequently asked questions' along with a handy step by step guide to implement the new rules.
Will the new rules impact existing employees?
No, the stapled fund rules only apply to new employees who commence employment on or after 1 November 2021.
How do the new rules apply to new employees that are subject to workplace determinations or enterprise agreements?
Existing employees covered by an enterprise agreement or workplace determination made before 1 January 2021 should not need to be offered a choice of superannuation fund. However, stapled fund details will need to be requested for any new employees.
Where an enterprise agreement or workplace determination is made after 1 January 2021, new employees must be provided with a Standard Choice Form. That is, employers will no longer simply contribute to the fund nominated by the workplace determination or enterprise agreement.
How do the rules apply when multiple superannuation accounts are identified?
Where an employee has multiple existing eligible super accounts, the ATO will apply 'tiebreaker' rules as outlined in the regulations to select and advise the employer of the appropriate stapled superannuation fund for that employee.
What happens if the stapled fund rejects the contribution?
Where a stapled fund rejects an employer's superannuation guarantee contributions, the employer will be taken to have not satisfied its superannuation guarantee obligations. Whilst the ATO does have the discretion to reduce any superannuation guarantee shortfalls that may arise in these circumstances, to mitigate the risk of penalties and interest charges for late payment, it is important to ensure that the organisation has processes in place to immediately identify when a contribution has been rejected.
What steps do I need to take from 1 November 2021?
There are three steps employers can take to ensure that they continue to meet their super guarantee obligations from 1 November 2021:
Step 1: Offer your new eligible employees a choice of super fund
Provide all new employees with a Super Standard Choice Form and pay super guarantee contributions into the account nominated on the form.
Step 2:Request stapled super fund details
Where the employee does not choose a super fund, you must request their stapled superannuation fund details from the ATO's online services, or via your tax agent.
Step 3:Pay super into the stapled super fund or a default super fund
Where a stapled fund is identified, the employee's superannuation contributions must be paid into the fund provided.
Where the employee has not chosen a fund and does not have a stapled superannuation fund linked to them, superannuation contributions can be paid into a newly created account in the employer's chosen default fund.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.