On February 17, the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 was introduced to Parliament. The Bill proposes a number of changes to the regulation of Australia’s superannuation industry, most of which are expected to pass.
The proposed changes are aimed at helping workers consolidate their Super and understand how their fund performs against others in the industry. While these rules are designed to help workers secure a more stable retirement, they have the potential to impact employers and their ability to remain compliant when hiring and handling new employees superannuation preferences.
The key change Employers need to know about: fund stapling
Subject to parliamentary approval, from 1 July 2020 the government intends for employees to keep their existing superannuation fund when transitioning between jobs. Employers will need to pay super into the employees existing super fund, unless they select another fund. The retainment of a sole primary super fund between jobs is called “stapling”.
Employers will need to get information about a new employees stapled superannuation fund from the Australian Tax Office (ATO). An employer must determine whether or not an employee has an existing stapled fund, and if so pay to that fund prior to paying to a default fund.
The ATO’s involvement
Employers or their agents will need to contact the ATO and act in accordance with the ATO’s notification. Accordingly, the ATO are required to make rules for identifying and selecting a person’s stapled fund, create and administer a digital platform to receive and respond to requests from employers about whether a stapled fund for their employee exists, and provide employers with this information.
How can employers reduce administrative burden going forward?
Currently, there is not a proposed way of automatically checking the stapled fund of a new employee, instead, the employer or their agent will be required to contact the ATO themselves each time a new employee is onboarded in order to verify whether the employee has an existing fund, a process that many are confident will become a source of administrative burden for employers.
If an employee makes the choice to join a new super fund during the onboarding process, this has the potential to reduce the administration required, provided the employer’s onboarding process allows them to join a superfund without manual intervention or paperwork.