What is Superannuation Stapling?

Superannuation Stapling was announced in the 2020/21 Federal budget and came into effect from 1 November 20201. 

Under this measure, existing superannuation accounts are linked, or ‘stapled’, to an individual employee so it follows them if they change jobs. This measure will prevent the creation of a new superannuation account each time a person changes their employment. 

What does this mean for employers?

The new rules require employers to use the ‘stapled super fund’ details for new employees who do not choose a fund rather than the employers’ default fund. These changes only apply to new employees who started working on or after 1 November 2021. 

Generally, employers will provide new employees with a superannuation Standard Choice Form within 28 days of commencing work. From 1 November 2021, if a new employee does not choose a fund the employer will need to check if the employee has a stapled super fund by logging into the ATO online services and accessing the ‘stapled super fund request service’. 

If the employee has a stapled fund, the employer will need to contribute to the employee’s stapled fund. If the employer contributes to their default fund rather than the stapled fund, they could be subject to the choice shortfall penalty. 

What if an employee has multiple super accounts?

Neither the employer or the employee has a role in the decision of which super account is stapled to the employee. The ATO will determine this, using certain ‘tiebreaker’ rules set out in the legislation. Generally, the stapled fund will be the fund the employee last received a contribution to however this may not always be the case. Therefore it is important for the employer to check which fund is the employee’s stapled fund rather than relying on the employee telling which fund they think is their stapled fund.

When does Stapled super fund not apply?

It is important to note, the employer will not need to request the stapled super fund details from the ATO for;

  • Existing employees – those employees who started work before 1 November 2021; or
  • New employees who have chosen a superannuation fund

Do I need to make changes to my employment contracts?

Employers will need to make changes to their employment contracts for employees starting on or after 1 November 2021. The superannuation clause/s will need to be updated to reflect the possibility of contributions being made to the employee’s stapled fund. 

Employees will be notified

Employees will be notified by the ATO when a request has been made in relation to their stapled super fund and what information has been provided to their employer. The ATO plans to monitor the stapled super fund request service to ensure employers are using the service appropriately, employers requesting information on employees who started work prior to 1 November may have their access removed.