Super stapling kicks in

Super stapling will undoubtedly benefit Australian workers, but it will also have an immediate impact on some employers. So if you run a business it’s worth knowing about.

By way of background, around 14 million Australians let their boss chose their super fund, simply going with whatever default super account their employer selects. In most cases, it’s a MySuper style of fund, offering low-fees and the bare essentials for insurance.

Our willingness to let the boss decide which fund will manage our retirement savings puts the onus of responsibility for choosing a decent fund onto employers. That’s a big responsibility for business owners, and a helpful resource is the free YourSuper comparison tool on the Tax Office website, which compares different MySuper options, and ranks them by fees and net returns.

The default system of super has a more problematic side, especially for workers. It has contributed to a massive $3.6 billion pool of lost and unclaimed super, which currently sits with the Tax Office. A good chunk of this money has ended up there because people inevitably switch jobs, and their employer signs them up to a new super fund with each move. Meanwhile, any old funds are left sitting idle and eventually make their way to the unclaimed super section of the Tax office.

Super stapling is aimed at solving, or at least reducing, this problem. From 1 November 2021, whenever an employer hires a new staff member, who doesn’t specify which fund they’d like the boss’s contributions paid into, the employer is required to contact the Tax Office. This will show if the latest staff member has an existing super fund. If they do, the boss’s contributions can be paid into that fund rather than signing them up to a new one.

In this way, super stapling keeps workers in touch with (or ‘stapled to’) a single fund through their working life.

It’s estimated that super stapling will cut the number of duplicated super accounts by 500,000. That’s good for workers, and good for the super system. It’s also a cue to check if you’re happy with your current fund especially if you’re thinking of changing jobs. If you’re in a dud fund, you could be stuck with it for a very long time.

The good news is that the SuperFund Lookup tool on the Tax Office website is available to employees to help make a choice around MySuper accounts. Or use comparison sites like Canstar to check out super options that extend beyond MySuper products.

Paul Clitheroe is Chairman of InvestSMART, Chair of the Ecstra Foundation and chief commentator for Money Magazine.