The super guarantee system, where employers now contribute 10% of wages to super for their employees has been largely successful in providing better retirement incomes for working Australians since its 1992 introduction.

It’s also had its fair share of problems, one of those being that employees end up with multiple super accounts (there’s currently around 6 million) as they move jobs. Many of these accounts end up either lost or eroded by fees and insurance premiums.

Under current rules, if you start a new job and don’t nominate a super fund, your employer will open a new account in a default super fund selected by the employer.

New rules will commence from 1 November 2021 whereby you will keep the same stapled super fund when you move from job to job – i.e. your fund will be “stapled” to you (sounds like a malicious office incident). Treasury has estimated that Australian workers will save $2.8 billion over the next 10 years under these stapling arrangements.

All employers will be obligated to apply these rules for new workers that commence from 1 November. If you’re an employer, here’s what you’ll need to do.

First, within 28 days of their start date, you’ll have to offer your new employee the usual choice of fund using the Super Standard Choice Form. No changes there. If they fail to nominate a fund, you’ll need to log into ATO online services and provide some basic information about the employee. The ATO will respond to you online within minutes, and if the employee has a stapled fund you must contribute to it. They will also advise the employee that the request was made.

If for some reason the employee doesn’t have a stapled fund, then you can add them to your default fund.

Oddly, employees with multiple super accounts don’t get a say in which fund becomes their stapled account. The ATO will determine this using tiebreaker rules set out in the legislation. Generally the stapled fund will be the fund the employee last received contributions into, otherwise the rules look for the largest account balance, then the newest creation date.

To override the tiebreaker rules an employee will need to use the Super Standard Choice Form when they commence employment.

Employees should also be aware of the new YourSuper tool which enables them to compare super funds ranked by fees and investment returns, with a prompt to consolidate accounts if they have more than one. You can also search for any lost super through your myGov account.

Related blog:

Penalties for late payment of super guarantee
Contributing to super – options for employees

Author: Mark Douglas