In the 2020-2021 Federal budget, the Government announced super reforms that are coming into effect throughout the 2021-2022 financial year. The shift in policy is aimed at streamlining the superannuation process for employees to essentially protect them from wasting or losing super. The existing system structure has resulted in some staggering statistics:
- As off 18 March 2021, there was a $13.8 billion in lost and unclaimed super.
- Data released by the Australian Taxation Office (ATO) for the financial year ending June 2020 shows that the Government’s reforms to date have had a big impact, reducing unclaimed super by $7 billion compared to 30 June 2019. NSW tops the nation in unclaimed and lost amounts at over $3 billion, and 6 of the top 10 postcodes. Victoria and QLD with around $2 billion, WA with just over $1 billion, SA with $798 million, the ACT with $231 million, Tasmania with $135 million and the NT with $161 million.
So what are your super changes?
There are four key elements to the new super reforms. The three below should not have a direct impact on employers:
- A new YourSuper comparison tool for individuals to be able to compare key data on MySuper products.
- A change to the duties of trustees of superannuation funds to act in the best financial interest of their members.
- A new super fund underperformance assessment to be conducted by APRA and published on our website.
The fourth, below, will impact employers. They will likely need to update their onboarding employment processes as a result.
- From 1 November 2021, where new employees do not choose a super fund, most employers will have to check with the ATO if their employee has an existing super account, known as a ‘stapled super fund’, to pay the employee’s super guarantee into.
What is stapled super fund?
A stapled super fund is an existing super account which is linked, or ‘stapled’, to an individual employee so that it follows them as they change jobs.
It is a very welcoming change as it would reduce account fees by stopping new super accounts from being opened. It will also have a great impact on administrative work for the ATO and individuals when tracking lost super or combining multiple super accounts.
It aims to also prevent super from being lost or unclaimed.
When will stapled super become effective and what employers should do to get ready?
Stapled super will become effective 1 November 2021.
If you have new employees start you may have an extra step to take to comply with choice of fund rules. You may now need to request their ‘stapled super fund’ details from the ATO, if the employee has not provided super information.
To make sure you’re ready to request stapled super fund details, check and update the access levels of your authorised representatives in ATO online services. This will also protect your employees’ personal information.
When would you be making a request for a stapled super fund?
Employers should be making super payments at least 4 times a year and before the quarterly payment due date.
If you have missed or pay super late, you may need to pay the superannuation guarantee charge (SGC).
If super details have not been provided by the employee, the stapled super check must be completed before you process payment.
Before you make the request, you must have either lodged
- Single Touch Payroll Event
- Tax File number declaration
How to make a request?
To make a request from 1 November 2021 you, or your authorised representative, need to:
- Log into ATO online services.
- Enter your employee’s details, including their:
- TFN – an exemption code can be entered where an employee cannot provide their TFN, but this could result in processing delays
- full name – including ‘other given name’ if known
- date of birth
- address (residential or postal), if TFN not given.
- Receive the response on-screen in online services. We will notify your employee of the stapled super fund request and the fund details we have provided.
A bulk request form will be available if you need to request stapled super fund details for over 100 new employees at once.
Stapled super fund is a new/extra step you may need to undertake before proceeding to fulfil your super obligations and whenever an employee super details have not been provided.
You would need to login to ATO online services to retrieve stapled super information and update your employees profile in your payroll/hr software. If there is no stapled super details, you will need to select the default super on behalf of your employee. Remember superannuation must be paid in accordance with the ATO timelines to avoid late payment penalties.
Please note if an employee has selected the employer default super fund, there will be no need to check the stapled super.
The ATO is currently working on automating this process. The proposed automation mean that from 1 July 2022 software providers can enable their products to give employers the option to automate the communications between the employer’s payroll system and the ATO system. If this new service is adopted, it will remove the need for the employer to manually enter into their payroll system their employees’ super fund details, reducing business administration costs.
- There is no stapled super and the employee has not opted into default fund in time for payment – Employers will be required to select the default super.
- EBA or award restricts super to one default fund and there is a stapled super fund in place for new employee – Employers will be required to select the stapled super fund.
- EBA or award restricts super to one fund and there is no stapled super fund in place for new employee – Employers will be required to select the EBA or Award default super fund.
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About Employment Innovations
Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.
The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.