Super stapling came into effect a month ago, so if you’re not familiar with what this term means just yet, now is the time to get acquainted., writes Ray Jaramis, Head of Financial Wellness at people management platform, Employment Hero.
It’s more important than ever to make sure you’re across updates to the rules when a new employee joins your business.
The lowdown on super stapling
Employees starting a new job should advise you, their employer, on which super fund they’d like their super paid into. The official term for this is ‘choice of fund.’
Where a choice was not made by an employee before the recent changes, employers could ‘default’ new starters into a company-nominated fund.
As of November 1 2021, ‘defaulting’ a new employee into your company-nominated superannuation fund is no longer allowed without first checking if they already have an existing fund.
If an employee’s existing fund is found (i.e. a ‘stapled fund’), you must use this for super payments, not your company-nominated fund. In the case that your new employee does not have a ‘stapled’ account nor specifies a ‘choice of fund’ only then would the employee technically default into your company nominated fund.
Helping to reduce multiple funds
While this may seem like yet another additional requirement for small businesses to add to their to-do lists, the intent of the Your Future, Your Super (YFYS) stapling measures are designed to help reduce the unintended creation of multiple superannuation accounts so employees don’t accidentally end up paying for multiple super funds, resulting in duplicate fees.
To this point, we’re seeing a lot of engagement from employers who are enjoying the benefit of our digital onboarding and human resources platform to help streamline and keep up to date with the ever-changing requirements of the employment landscape.
These latest updates to super highlight the importance of employees being engaged with their superannuation arrangements. While it’s key to remember as an employer you shouldn’t provide recommendations or advice about where an employee pays their super (unless of course you’re licensed to do so), you can remind employees of the importance of choice and choosing a fund of their preference, and make them aware of the great resources available, such as MoneySmart, to help them make well-informed decisions about their financial life.
A good time to review your super
In short, super stapling is a great catalyst for employers to encourage staff to understand their super fund and, if appropriate, take the time to get some advice on their options.
There’s a risk of penalties for small businesses who aren’t across what they need to do, so it’s better to read up on these new super changes sooner rather than later.
You can access a handy super stapling factsheet here.
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