Super Stapling Reform - Here's What You Need To Know
‘Super Stapling’ is here. Find out what it is and what the changes mean for you.
Written by Victoria Kent, Senior Investment Specialist
Photo by Efe Kurnaz on Unsplash
This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.
Since November the regulatory burden has shifted to employers’ shoulders - we can help you alleviate it for them.
In 2021, employee onboarding changed forever. In order to comply with the new ‘super stapling’ requirements, employers needed to change their onboarding and payroll processes.
This was all part of the "Your Future, Your Super" legislation, which like all good reforms, was well-intended with some unintended consequences.
From 1 November 2021, if a new employee doesn’t nominate a super fund for their super guarantee contributions, most employers will need to request the employee’s ‘stapled super fund’ (existing super account) details from the ATO.
If this sounds complicated, it’s because it is. And we'd be stating the obvious by saying superannuation is already a tricky area to navigate.
From an employees’ perspective, having your superannuation follow you in this 'stapled' fashion prevents the creation of unintended multiple superannuation accounts when you change jobs. Thumbs up.
From the employer's perspective, however, stapling has created an administrative burden as the compliance responsibility has shifted to employers.
Previously, when an employee didn't nominate a super fund, employers were simply able to pay their contributions to a default "MySuper" product of the employer’s choosing.
Under the new legislation now in force, this is no longer allowed. Employers will only be allowed to pay into their “default” super fund when the employee doesn’t have a stapled fund, lest face penalties.
The onus is on the employer to find out if the employee has an existing super account. Ok, fine. But this can be tricky.
Before an employer can even make an ATO enquiry, they need to have submitted the Tax File Number Declaration or Single Touch Payroll pay event to confirm they’re linked to their employee.
Only then can they manually contact the ATO to look up the employees stapled super fund status.
Sound onerous? It is. Especially during this "Great Resignation" period where millions of employees are changing jobs and/or industries.
A report by HR platform Employment Hero warned employers to "prepare for movement on a massive scale". In their survey of over 1,000 Australian workers, 48% of planned to look for a new job in the next six months and 15% were already looking for a new job.
In this age of mass movement and worker discontent, you have to feel for employers. Already contending with turnover and competitive recruitment challenges, the stapling rules mean now even onboarding new employees is a hassle.
For the HR platforms, here lies the opportunity:
Technology, in the way of embedded finance, exists to alleviate the compliance burden from employers, and streamline the process for employees. And it's a straightforward process that is a win-win for everyone.
HR platforms that embed a superannuation choice option into the employee onboarding workflow makes it easy for employees to sign up, often in as little as 3 clicks. New hires love this, as automation means less paperwork, less running around, and fewer errors.
What's more is that this solution makes it easy for employers to stay compliant, alleviating the headache of organising super stapling directly with the ATO.
For the employment platforms, embedding a superannuation choice option via native integration means it's all done within the platform’s own website or app retaining the customer as well as the 'look and feel' that is experienced.
Embedded super means employment platforms are able to help their customers remain compliant while offering genuine choice to their underlying employees.
Superannuation choice is an integral part of the digital onboarding process of new hires. And this choice, where they put their super, has massive ramifications for an employee’s retirement as well as the type of world they retire into.
Key takeouts:
Shift in compliance burden to employers is an opportunity for HR platforms.
Embedded super is a straightforward process that’s a win-win for everyone.
Superannuation choice is an integral part of the digital onboarding process of new hires.