From 1 November 2021, employers will need to determine if a new employee has a “stapled” fund and request such details from the ATO in the event that the new employee has not chosen a super fund. A stapled super fund is essentially an existing super account that is linked or “stapled” to an individual and follows them throughout their job changes
Currently, when a new employee starts a new job, they are eligible to choose the super fund that their super guarantee contributions go to. If they do not choose their own fund, the super contributions will be paid into the employer’s default fund.
With the passing of recent legislation to make it easier for employees to take their existing super funds with them when they move jobs, from 1 November, if a new employee doesn’t choose a super fund, employers may be required to request their “stapled super fund” details from the ATO. A stapled super fund is essentially an existing super account that is linked or “stapled” to an individual and follows them throughout their job changes.
This change was designed to reduce the burden of paying unnecessary fees on multiple super accounts. The current superannuation system has resulted in an estimated six million unintended multiple accounts which can be a big drain on members’ superannuation savings
From 1 November, you will still need to offer your eligible employees a choice of super fund and pay their super into the account they tell you, that part of your obligations doesn’t change. However, if your employee doesn’t choose a super fund, you will need to request the stapled fund details from the ATO. In most cases, a request can be made after you’ve submitted a TFN declaration or a Single Touch Payroll pay event linking the new employee to your business. There is no limit to the number of requests you are able to make.
Responses will usually be received through the online portal in minutes. The ATO will also notify the associated employee of the stapled fund request and the fund details provided. If the resulting stapled fund cannot accept new contributions from the employee due to one reason or another, employers will need to make another request for the employee’s stapled super fund through the online portal.
In the event that this new request returns the same stapled super fund, employers will be required to call the ATO to obtain an alternative stapled super fund account. At the same time, the ATO will be able to advise whether contributions can be made to a default fund or another fund that meets the choice of fund rules in that situation.
Businesses that have over 100 new employees starting are able to make a bulk stapled fund request to the ATO. Bulk requests will need to be in a particular format and can be made through the secure mail function within online services for businesses. Once the file is processed, a response will be sent through the secure mail function and can take up to 5 business days.
Remember, you as a business/employer cannot provide recommendations or advice about super to your employees unless you are licensed by ASIC to provide financial advice. Further, if you fail to meet the choice of super fund obligations, penalties may apply.
If your business is getting ready for a hiring drive when lockdown ends, you’ll need to make sure there are systems in place to comply with these new obligations. Don’t be caught out, our Bookkeepers & Accountants at Alexander Bright can help you with this and ensure your business runs smoothly.