From 1 November 2021, all new employees hired on or after this date that has not provided their own fund detail when commencing employment or has not selected the employer default superfund option within the super choice form will now require the employer to search the ATO for the employee stapled superannuation fund. 

This may result in some additional administrative steps when you hire a new employee.

The changes relate to a reform of the super industry. Which covers 4 areas only 1 of which applies to you as an employer. A fact sheet can be found here.From 1 November 2021, changes to the super choice rules may require the employer to search the ATO for the employee stapled superannuation fund.

In short, the 4 areas are:

  • Reducing the number of default funds Australians have under the “Your super follows you” section;
  • Making it easier for Australians to compare and choose a fund under the “Empowering members” section;
  • Encouraging lower fees and costs associated with super under the “Holding funds to account for underperformance” section; and
  • Uncovering how super funds use member savings under the “Increased transparency” section.

Things to be aware of:

  • Searching the employee stapled fund can be done after the employer has filed the employee TFN declaration and lodged their single touch payroll event.
  • Once the above has been completed, only then will the employee’s stapled super fund will be accessible via the tax agent/business portal using TFN declaration information, being, Tax file number, full name, and/or date of birth.
  • The new search function is not yet available on the ATO however, it is believed this will be available at the latest 1 November within the tax agent and business portal.

The ATO is attempting to make this easier from next year in that your payroll software will be able to talk to the ATO and automatically do this, but for now, you will need to manually check ATO via the ATO online services for a fund for the new starter.

  • The ATO will notify the employee about their employer’s request for stapled super fund details and what has been provided by the ATO to the employer. ATO will be providing more information on this closer to the date.
  • In the event that a stapled fund does not accept the contribution from an employer then we have to re-submit a new request with the ATO to get new stapled fund details and re-submit the contribution to the new fund. If the new fund also doesn’t accept the contribution, then the employer can allocate the contribution to the employing entities' default fund of the employer. 

From 1 November 2021, changes to the super choice rules may require the employer to search the ATO for the employee stapled superannuation fund.

In summary:

Under the current system, your employee has the right to choose their super fund. They do this via a Super election form which they give you when they first start. IF they fail to provide you a fund of their choice, then you have to pay their contributions into the employer default fund. This default fund would be the one used for all employees who fail to nominate a fund.

The new approach slightly changes the above process in that if an employee fails to supply you a fund to pay their super entitlements into, you need to first do an ATO search to see if they have a nominated fund. If they do, then rather than using your default fund, you need to pay their entitlements to the nominated fund you discover from the ATO search. If they don’t, then you create a new account for them with your default fund and continue as before.

Ideally to reduce the administrative burden on your business, encourage all new employees to give you a nominated super fund or select the default super fund.

For more information

If you would like further information on the super choice rule changes, please reach out to your local RSM adviser.