A focus on 'stapling'

Understanding the business impact of changes to superannuation. 

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

'Stapling' is effective from 1 November 2021.

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.

There are tie-breaker rules to determine which fund will be ‘stapled’ to an employee where they have multiple funds. 

You will need to check with the Australian Taxation Office (ATO) if your employee has a 'stapled' fund. From 1 November 2021, you will be able to identify a new employee’s ‘stapled’ fund by logging onto ATO Online Services and entering the employee’s details.

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

The Australian Taxation Office (ATO) also provides information on requesting ‘stapled’ super fund details for employees. You can also watch the ATO’s ‘stapling’ webcast for employers

What do I need to do as an employer?

From 1 November 2021, the process of making Super Guarantee (SG) contributions for any new employees will change and this will impact your employee onboarding and payroll processes.

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:

If an employer doesn’t pay SG into a new employee’s ‘stapled’ fund from 1 November 2021, they may be in breach of choice of fund law and incur associated penalties. For more information on SG penalties, visit the ATO website. 

You can use the process chart below to help you understand what needs to happen under the new rules.

Diagram: 'Stapling' – a guide for employers, from 1 November 2021

Flowchart illustrating the scenarios from the text in the previous paragraph.
* Super Guarantee contributions can also be made to a fund specified under a workplace determination or an enterprise agreement if the determination was made before 1 January 2021.

Will existing employees be affected?

Existing employees are not 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.

The ATO has published a webcast designed to help employers understand the new ‘stapling’ rules.

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

Your questions answered

We’ve included below our answers to commonly asked questions about ‘stapling’.

The ATO also provides more information on requesting ‘stapled’ super fund details for employees. You can also watch the ATO’s ‘stapling’ webcast for employers

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.

Tie-breaker rules will determine an employee’s 'stapled' fund where an employee has two or more funds that meet these basic requirements.

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. The ATO also provides information on requesting ‘stapled’ super fund details for employees. You can also watch the ATO’s ‘stapling’ webcast for employers

Where the ATO identifies multiple funds that may be 'stapled' to an employee, four-step tiebreaker rules apply according to 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?

The ATO is expected to update the Standard Choice Form for 'stapling'. It is expected they will publish this shortly.

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. However, in the first 12 months (1 November 2021 to 31 October 2022) of 'stapling', the ATO has indicated it may apply some leniency with penalties for non-compliance with the 'stapled' fund rules unless there is evidence that the employer did not make reasonable attempts to comply with the 'stapled' fund rules. The ATO will apply its normal approach to non-compliance from 1 November 2022. For more information on SG penalties, visit the ATO website.

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, in most cases employees would need to consent to rollover their existing balance across to any new fund. SG contributions would be required to continue to be directed to an employee’s existing account if the account is a ‘stapled’ account, or where the employee has made a choice of fund.

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 20 October 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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