I’m an Employer. What Do I Need to Know About My Employees’ Stapled Fund?

From 1 November 2021, changes to superannuation rules in Australia will impact employers and business owners. Now, when onboarding new employees, employers must contact the Australian Taxation Office (ATO) to find out if their employees’ have a stapled fund. To find out what this means and avoid breaching your employer obligations, this article will discuss these changes and how they impact your business. 

Changes to Superannuation

When new employees join your team, they typically need to choose a superannuation fund. From there, your business would make super contributions to this nominated fund. Your employer contributions go towards your employee’s retirement fund.

If your new employee does not choose a super fund, you will need to contact the ATO. The ATO will inform you of whether the employee has a stapled fund, and then you can make contributions to this fund. 

What is a Stapled Fund?

A stapled fund is a superannuation fund that an employee already has, which they can use from job to job since it is ‘stapled’ to them. 

The government implemented these changes to prevent individuals from having multiple superannuation funds between jobs. Multiple funds led to employees losing money, whether that was losing the benefits of compound interest or the cost of setting up fees which reduced the funds available to employees when they retire. 

How Will This Impact Your Business?

1. Taking an Extra Step When Onboarding New Employees

These new changes requires you to take an extra step when onboarding new employees. To complete this process, you must have your employees:

• full name;
• tax file number;
• date of birth; and
• residential address.

Previously, employers did not need to contact the ATO regarding whether their employee had a stapled fund. This step has been automated, and employers can do this online. In addition, you can request stapled fund details online and can even make bulk requests. 

If you prefer not to use the ATO’s online system, you can use a tax agent too. 

2. Checking Your Policies and Procedures

It is crucial to ensure your current policies are ready for this change. Then, as per normal procedure, provide new employees with a Superannuation Standard Choice Form. If they do not select a superannuation fund, you must check with the ATO if they have a stapled fund and use that account if they do.  

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Note, your policy should include the increase in the minimum rate of superannuation contributions which are now 10% as of July 2021 and is looking to increase to 12% over the following years. 

Additionally, ensure that your employee’s personal information is protected for only the necessary people to access. 

Remember, not following these changes to superannuation rules can lead to a breach of choice of fund laws, resulting in penalties. 

Key Takeaways

From 1 November 2021, your business should be using Australian Taxation Office services to access employees’ stapled funds. These changes only apply to onboarding new employees and only if they do not choose their own super fund. 

If you need help understanding your employer obligations, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

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