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Stapled Superannuation Funds and Other Super Updates
Many Australians are familiar with the frustration and financial cost of maintaining several superannuation funds as we change jobs over time. As employers have a default fund, into which many new starters will elect to have their super paid, a large number of workers end up with multiple super funds that may have very little invested, and is likely paying account fees to maintain. As part of the federal government’s Your Future Your Super (YFYS) reforms, the introduction of “Stapled” Superannuation Funds aims to ensure that an individual’s future super balance is not adversely impacted by the duplication of funds and the fees that go along with it.
Stapled Superannuation Funds – What Are They?
A stapled superannuation fund is an existing super account which is linked (“stapled”) to an employee, following them as they change jobs. The idea behind this is to reduce the number of super accounts Australians accumulate over their working life in order to maximise their retirement savings. Employees will be attached to one fund for life unless they choose otherwise. There are currently an estimated six million unintended multiple super accounts in the system, which are taking fees and ultimately reducing members’ retirement savings. By introducing stapled superannuation funds, this should be less of an issue moving forward as new employees to a business will be able to have their super paid into an existing account even if they do not complete a Superannuation Standard Choice form.
How Stapled Superannuation Funds Impact Your Onboarding Processes
Super stapling commences from 1 November 2021, so it is critical to ensure your business is aware of the obligations that come with it. From this date, if a new employee commences work in your business and has not nominated a super fund on a Superannuation Standard Choice form, you will need to search for their stapled fund through the ATO’s Online Services. Using the employee’s Tax File Number (TFN), name, date of birth and address, you can locate the details on their stapled fund and use it for their super guarantee payments as well as any relevant salary sacrifice arrangements.
To remain compliant with the provision of stapled super funds, it is recommended that you review your business’ internal onboarding processes and ensure that it includes the acquisition of a new employee’s TFN, and other details outlined above. This will ensure that should your new employee not complete a Superannuation Standard Choice form you will be able to track down their stapled fund.
Other Super Updates
As part of the broader YFYS reforms, the government will also actively hold underperforming MySuper funds to account by subjecting them to annual objective performance tests based on their net investment returns (after fees). Funds that do not perform to the standard set by the government must inform their members in writing that their product is underperforming. Funds that fail two consecutive annual tests will not be permitted to accept new members until their performance improves.
Another measure being brought in through YFYS reforms is a commitment to increasing transparency and accountability regarding how super fund members’ money is spent. Trustees will now have to demonstrate that they are acting in the best interest of their members when they spend their money and will be held accountable by APRA when they cannot justify that expenditure. The fund must also advise their members how their money is being managed and spent, and this open line of communication is being put in place to increase member engagement and fund transparency.
When your business is growing and onboarding new employees, it can be hard to keep track of all of your obligations and bookkeeping. The team at CFO2GO have years of experience in alleviating the burden of bookkeeping on business owners and allowing them to get back to what they do best – running their business!
Feel free to reach out to us today on 08 9301 2200 (Joondalup); 08 9361 3300 (Victoria Park); or via our website.
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