Friday, 29 October 2021

Changes to the Default Superannuation Fund process from 1 November 2021: Introduction of “Stapled” Superannuation Funds for Employees

In the national budget for the 2020-21 financial year, the Federal Government announced the Your Future, Your Super reforms, which are intended to improve the efficiency, transparency and accountability of the superannuation industry.

This led to the passing of the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 in June 2021, which introduced annual performance assessments for super funds and amended the duties of super fund trustees. The Bill also introduced the concept of “stapled” superannuation funds for employees.

Previously, on commencement of employment, employers were required to ask new employees if they wished to nominate their preferred superannuation fund via a Superannuation Standard Choice Form.

Currently, if an employee does not nominate their preferred superannuation fund for the employer to make contributions to, employers are required to remit any applicable superannuation contributions into a ‘default’ fund of the employer’s choice (provided it is a complying fund). Some modern award or enterprise agreements also specify which default superannuation apply to certain employers or industries.

This process has often resulted in one employee having a number of different superannuation accounts with different default funds chosen by their previous employers, with many accounts often being “drained” or reduced by the fees of each superannuation fund and losing the benefits of compound interest, thereby resulting in less funds being available to workers on retirement.

To address this, the Federal Government has introduced the concept of “stapled” funds.

The Federal Government’s view is that workers who already have a superannuation account should only have another account if they decide to open one. Therefore, moving forward, a superannuation fund member’s account will be ‘stapled’ to them as they change jobs and in effect, when an employee first chooses a superannuation fund at the beginning of their working life (or the first time they are entered into a default fund), that fund will be ‘stapled’ to them from then on, including when they change jobs.

These changes will apply Australia wide from 1 November 2021, and there will be a new requirement that if the employee does not nominate a superannuation fund, the employer must check whether a stapled account applies to a new employee via the ATO’s online services platform, and if so, make all superannuation contributions into that fund rather than the employer’s default fund. Employers will only be able to make superannuation contributions to their own default fund where there is no stapled fund on the ATO’s online services platform.

Employers will be able to request employee stapled superannuation fund details after they have submitted a Tax file number declaration or Single Touch Payroll pay event, which identifies that there is an employment relationship. There is no limit to the number of requests that can be made, and bulk requests can also be made.

If employers do not meet their choice of superannuation fund obligations, additional penalties may apply.

Please also note that these changes also apply to contractors for whom superannuation contributions are made.

What do employers need to do moving forward?

From 1 November 2021, when a new employee commences employment, employers should ensure that they take the following steps:

  1. Provide new eligible employees a Superannuation Standard Choice Forms as usual which allows employees to nominate their preferred superannuation fund (unless the employer is not required to offer the choice of superannuation fund).
  2. If the employee nominates a superannuation fund at this stage, then the required superannuation contributions should be made by the employer to that nominated fund.
  3. If the new employee doesn’t nominate their preferred superannuation fund, employers must request stapled superannuation fund details via the ATO’s online services platform to establish whether there is a stapled fund for the relevant employee.
  4. If there is a stapled superannuation fund on record, then superannuation contributions should be made to that fund (provided it can accept contributions).
  5. If there is no stapled superannuation fund on record, employers can make superannuation contributions into its chosen default fund as usual.

Employers should also consider updating any superannuation clauses within their employment contracts or policies if they are inconsistent with the above changes.

Finally, it is also important to bear in mind that the minimum rate of superannuation contributions increased from 9.5% to 10% as of 1 July 2021 and is due to increase over the next few years until superannuation contributions reach 12%. See our previous article here for more information.

If you have any questions regarding your superannuation obligations, please contact us directly at


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.