A focus on 'stapling'

Preparing your business for upcoming changes to superannuation.

There are some significant changes proposed to superannuation that will affect employers. We can help you understand the impact they will have on how you manage your superannuation obligations and make sure you stay compliant.

'Stapling' will commence from 1 November 2021.

This is perhaps the biggest change for employers. You can read about the other proposed changes to super on our changes to superannuation page, or by watching a recording of our ‘Super Changes and what they mean for employers’ webinar.

What is ‘stapling’?

‘Stapling’ is where your new employees will automatically keep their existing super fund (if they have one) when they start their employment with you, unless they choose a fund themselves.

Draft regulations (released 28 April 2021) include the definition of a ‘stapled’ fund and tie-breaker rules to determine which fund will be ‘stapled’ to an employee where they have multiple funds. 

The Australian Taxation Office (ATO) is expected to publish more information about ‘stapling’ shortly, including how employers can determine an employee’s ‘stapled’ fund.

You can read more about 'stapling' in our April webinar Q&As at the end of this article.

How ‘stapling’ impacts your new employee onboarding process

This change will impact your onboarding process for new employees only.

Where a new employee makes their choice of super fund:

  • If a new employee notifies you of their preferred fund (using the Standard Choice Form), you must make payments into this account.

Where a new employee doesn’t make their choice of super fund:

  • Where a new employee does not choose a super fund, you must contact the Australian Taxation Office (ATO) to see if the employee has an existing super fund – their ‘stapled’ fund. If they do, you must make payments to this account.
  • If the new employee doesn’t have a stapled fund and doesn’t choose a fund, then you must create a new account with your nominated default super fund.

Will existing employees be affected?

Existing employees aren’t expected to be affected by these changes. You must continue to make their compulsory SG payments into the same super fund account you do today. 

Keep informed

Read about the other proposed changes to super in 2021.

If you missed our 'Super changes and what they mean for employers' webinar, you can watch a recording of it.

To stay up to date with the latest news on these changes follow BT on LinkedIn.

Your questions answered

Our April webinar generated lots of discussion and questions about ‘stapling’. We’ve included below our answers to the most commonly asked questions.

What is a 'stapled' fund?

A ‘stapled’ fund is effectively an employee’s super fund that follows them from job to job unless they actively choose another fund.

For a fund to be ‘stapled’ it must be a complying super fund or a Retirement Savings Account (RSA) which can accept contributions made on behalf of an employee, and the employee must be a member of the super fund or hold the RSA.

If an employee completes the Standard Choice Form, do employers still need to contact the ATO to see if this is their stapled fund?

When you onboard a new employee from 1 November 2021, they can elect to make their own choice of super fund using the Standard Choice Form. If they do this, you must make payments to this account, whether or not it is classified as their ‘stapled’ fund – you do not need to contact the ATO to confirm their stapled fund details in this instance.

This includes where an employee requests their super to be paid into an employer’s default super fund.

You should keep a copy of the Standard Choice Form on file to demonstrate compliance.

How do employers find the details of a new employee’s stapled fund?

Employers will be able to identify a new employee’s stapled fund by logging onto ATO online services and entering the employee’s details. More information is expected to be released by the ATO prior to the start date of 1 November 2021.

Where the ATO identifies multiple funds that may be stapled to an employee, tiebreaker rules will apply in the following order.

  1. The most recent fund identified by the ATO will be the employee’s stapled fund for the selected period (from the start of the previous financial year until the day when the ATO applies tiebreaker requirements).

  2. If 1. doesn’t apply to the eligible funds it will be the fund that received the most recent contribution over the selected period.

  3. If 1. and 2. do not apply it will be the fund that held the largest balance at the end of the previous financial year.

  4. If none of the above apply the ATO will consider factors like when an employee joined a fund and other relevant information to identify the stapled fund.

Employees will also be able to see details of their stapled super fund in their myGov account.

If an employee completes the Standard Choice Form and they select their stapled fund, does an employer have to do anything different to show it is a stapled fund?

If a new employee makes their own choice of super fund using the Standard Choice Form, you must make payments into this account. There is no need to check for a stapled fund with the ATO or do anything different to show that they have selected their ‘stapled’ fund.

You should keep a copy of the Standard Choice Form on file to demonstrate compliance.

Will the Standard Choice Form be amended to include the stapled fund as an option?

There is currently no indication from the ATO that the standard choice form will be updated for stapling.

If a person is stapled to an employer default fund, what happens if they leave the employer?

If this super fund is classified as their stapled fund by the ATO, they will remain in that fund until they choose to move to another fund.

What will happen if an employer doesn’t pay SG contributions into a new employee's stapled fund after 1 November 2021?

If an employer doesn’t pay SG contributions into a new employee’s ‘stapled’ fund after 1 November 2021, they may be in breach of choice of fund law and incur associated penalties. 

Note: From 1 November 2021, when an employee commences with an employer, the employer must pay super benefits to the person’s existing ‘stapled’ fund (if they have one) or to their nominated fund. Default funds will only be used where a person has no ‘stapled’ fund and does not choose a fund.

Can an employer still change their default fund under the stapling provisions?

Yes, an employer still has the option to change their default super fund arrangements. However, employees would need to ‘opt-in’ to any fund (using a Standard Choice Form) and consent to roll their existing balance across. Stapling will see the end of ‘opt out’ transitions.

This could impact tailored pricing and automatic acceptance limits, as the number of members choosing to opt-in to the new arrangement will be unknown. The insurer will also need to consider selection risk for those choosing to opt-in and how they manage that process is yet to be clarified.

Whether you own a small business or run a big company, BT Super can help you manage your employer super with ease.

Answer a few simple questions to help you check if you’re meeting your business super obligations and doing the right thing for your people. It only takes about 5 minutes.

Our dedicated business super team is here to help you with everything super-related.
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This information is current as at 18 June 2021.

The information is prepared by BT Funds Management Limited ABN 63 002 916 458 (BTFM) the trustee of:

(a) BT Super for Life, BT Super for Life Westpac Group Plan and BT Super part of the superannuation fund Retirement Wrap ABN 39 827 542 991; and

(b) Asgard Employee Super Account part of the superannuation fund the Asgard Independence Plan Division Two ABN 90 194 410 365. 

This information has been prepared as general advice only and does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs before acting on it. Read the Product Disclosure Statement (PDS) to see if these products are right for you by visiting bt.com.au or asgard.com.au. 

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