Currently, when an employer hires a new staff member, they must provide the new employee with a Choice of Fund form (as well as the Tax File Number Declaration and the Fair Work Information Statement) to identify where they want their superannuation to be directed. If the employee does not identify a fund, the employer directs their superannuation into a default fund.
When someone has multiple funds, it often erodes their balance through unnecessary fees and often insurance. At 30 June 2020, there was $13.8 billion of lost and unclaimed superannuation in accounts across Australia.
From 1 November 2021, where an employee does not identify a fund in their Choice of Fund form, employers now need to link the employee to an existing superannuation fund. That is, an employee’s existing superannuation fund will become ‘stapled’ to them and an employer will not simply be able to set up a default fund. Instead, employers will be required to request that the ATO identify the employee’s stapled fund. The request for an employees stapled fund details can be made through your payroll software after you have submitted the TFN declaration or Single Touch Payroll event linking the employee to the employer.
If the ATO confirms no other fund exists for the employee, contributions can be directed to the employer’s default fund or a fund specified under a workplace determination or an enterprise agreement (if the determination was made before 1 January 2021), however, if an employee has a stapled fund then contributions must be made to this fund.
Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required please contact our team.