Stapling and other 2021 super changes – A recap for employers

As an employer, you probably know the government has made some sweeping changes to superannuation this year. It’s hard to keep up!

It’s important to be aware of these new rules and changes and what they mean for you and your employees.

Many of the changes came into effect on 1 July with others rolling out over the rest of this year and next year.

When?  1 November 2021

What?  In a significant change to super this year, ‘Stapling’ means employees have one recognised super account that is ‘stapled’ to them. In effect, it will follow them as they move from job to job.

The detail:  Employees will be ‘stapled’ to their existing super fund (assuming they have one) when they begin employment with you. Unless new employees provide you with a Choice of Fund form selecting your nominated super fund, or some other fund of their choosing, you will be obligated to pay their superannuation guarantee (SG) contributions into their stapled fund. Employees will still be free to provide you with a Choice of Fund election to another fund, at any time during their employment with you.

You are still obligated to enrol a new employee into your nominated ‘default’ super fund if they:

1. haven’t provided a completed Choice of Fund election (either by form or via MyGov), and

2. don’t have a ‘stapled’ fund. (You will need to check their status with the Australian Taxation Office (ATO)).

What do you need to do?

• Your superannuation offer is an important part of your employee benefits package.
  You should review your communications to prospective and new employees to clearly explain the:
  

  1. Features and benefits of your nominated super fund,

  2. Availability of a Choice of Fund form (or via MyGov) to enable the employee to choose your nominated fund (or another fund).

• Ensure that you do the necessary checks before you enrol a new employee into your nominated ‘default’ fund. If you haven’t checked with the ATO that your employee has a stapled fund, and you pay super to your default fund, you could be in breach of your ‘Choice of Fund’ obligations.

• Stay tuned for further announcements over the coming months from the ATO and smartMonday. The ATO is updating this information regularly.

From 1 November 2021, a super fund will be ‘stapled’ to an employee, following them as they move from job to job, unless they choose another fund via a Choice of Fund form or their MyGov portal (linked to the ATO). This other fund will then become the employee’s stapled fund until such time they choose another fund.

When you hire a new employee, if they haven’t provided you with a Choice of Fund election, you’ll need to check with the ATO to see if they have a stapled fund. If so, you’ll need to pay SG into that.

The ATO determines an individual’s stapled fund. Where someone has multiple super funds, the ATO applies ‘tie breaker’ rules to determine which is the stapled fund.

The latest information is available from the ATO’s Request stapled super fund details for employees page.

Yes. It is mandatory for employers to provide employees with a Standard Choice of Fund form. You need to record when you provide it, and when you collect a completed form from your employee.

As an employer with a nominated ‘default’ super fund, you can still provide details of your fund in Part B of the form.

More information is available at the ATO’s Offer employees a choice of super fund page.

No. Receiving a Choice of Fund election (either via a form or the employee’s MyGov portal) means you will need to make payments to that super account. It doesn’t matter whether it is the employee’s stapled fund or not. You need to record receipt of the employee’s Choice of Fund election and keep it on record for 5 years.

More information is available at the ATO’s Offer employees a choice of super fund page.

Yes. While the ATO has not confirmed this at the time of writing, we anticipate it will update its Standard Choice of Fund form to clarify where employers need to pay SG contributions if the employee doesn’t choose a fund.

The latest information will be available at the ATO’s Offer employees a choice of super fund page.

Employers:
From 1 November 2021, by logging onto ATO online services and entering the employee’s details. If you have large numbers of new employees, the ATO will facilitate bulk lodgements via the portal. More information will be released by the ATO in the lead up to 1 November on its Request stapled super fund details for employees page.

Employees:
Employees will be able to see details of their stapled super fund via their personal MyGov account (as long as it is linked to the ATO portal).

Existing employees aren’t affected by these changes. You must continue to make their superannuation guarantee (SG) payments into the same super account you do today.

Existing employees are still able to exercise Choice of Fund (via a standard form or via their personal MyGov portal linked to the ATO).

The person will be stapled to that fund (as determined by the ATO) and the super account will follow the person from job to job, unless they choose to move to another super fund.

Note that some benefits an employee receives in their super fund may cease when they leave the employer. This could mean an increase in product fees and insurance costs.

If you don’t pay SG contributions on behalf of you employee into their stapled fund after 1 November, you may be in breach of the Choice of Fund laws. Penalties may apply, however the ATO has indicated some leniency in applying penalties if the employer is seen to be making reasonable attempts to comply with the new rules.

The latest information is available on the ATO’s Request stapled super fund details for employees and Super for employers pages.

Yes. As an employer, under the current laws, you must have a ‘default’ super fund set up to pay SG contributions for those employees who haven't chosen a fund, and from 1 November 2021, who have no stapled fund.

The latest information is available from the ATO’s Select your default super fund page.

Providing a ‘default’ superannuation offer remains an important part of your employee benefits package to provide unique arrangements for employees such as:

• life insurance tailored to the unique needs of your workforce

• subsidised fees and costs

• tailored communications and seminars such as financial wellbeing and access to research.

When?  From 1 July 2021

What?  The SG rate increased to 10%, the first increase since 2015. Further gradual increases are legislated to occur over the next few years until the SG rate reaches 12% in 2025, although this may be subject to the views of the government during that time.

When?  From 1 July 2021

What?  Contribution caps increased for the first time since 2017:

When?  1 July 2021

What?  In 2018, Single Touch Payroll (STP) was introduced so employers could simply report all employee payroll information directly to the ATO every pay period. While employers with more than 20 employees have been using this for years, now all employers need to report payroll obligations electronically (unless they have an exemption).

The detail:  Further enhancements are scheduled for STP, with a second phase rolling out on 1 January 2022. Working with software providers, the ATO will update all existing STP-enabled software systems, ensuring consolidated reporting availability, streamlining reporting for employers.

The latest information is available from the ATO’s Single Touch Payroll page.

If you require any support with understanding these changes then please reach out to your smartPartner.