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Superannuation Stapled Funds

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On 17 June 2021, as a part of the 2020-21 Federal Budget, the Federal Parliament passed the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 which, amongst other changes, introduced the concept of ‘stapled’ superannuation funds.

The introduction of ‘stapled’ funds is intended to prevent the unnecessary creation of superannuation accounts when employees change jobs, as well as ensuring that employees’ superannuation balances are not eroded by the separate fees and premiums charged by each super fund.

From 1 November 2021, any employee who has started employment on or after 1 July 2021 will be deemed to have a ‘stapled’ fund if they have an existing superannuation fund that meets certain requirements. These requirements will be contained in regulations which have yet to be released. The exposure draft of the regulations suggests the following requirements:

  • The fund either complies with the requisite income tax requirements, or is a retirement savings account;
  • The employee is a member of the fund; and
  • The fund can accept contributions from the employer.

In the event there are multiple eligible superannuation accounts, tiebreaker rules based on account activity and account balance, have been suggested.

An employee’s stapled fund will act as their default fund and follow them if they change jobs.

What do employers have to do?

For new employees employed on or after 1 July 2021, where the employee has not specified a fund to receive super contributions, the employer must check with the ATO to determine whether the employee has a ‘stapled’ fund.  If the new employee has a stapled fund, the employer must pay superannuation contributions to the ‘stapled’ fund, as opposed to the employer’s own default fund.

If the new employee does not have a ‘stapled’ fund, the employer must pay superannuation contributions into its nominated default superannuation fund.

As a result of these legislative changes, employers are also required to pay superannuation contributions to an employee’s ‘stapled’ fund instead of any superannuation funds specified by workplace determinations or enterprise agreements made before 1 January 2021.

These rules do not apply if the employee began employment before 1 July 2021, does not have a stapled fund, or has chosen a superannuation fund by way of a superannuation standard choice form. For existing employees, employers should continue to make super contributions to the existing superannuation fund for each employee.

If you would have any questions in relation to this article, MST Lawyers’ Employment Law team can assist you in understanding your employer obligations. Please contact us today at EmploymentLaw@mst.com.au  or by phone +61 3 8540 0200.