Your future your super legislation

On 17 June 2021 the Government passed the Your Future Your Super (YFYS) legislation.

The three major reforms are:

Stapling

A new law that will link a person to one super fund and the stapled super fund will follow the person when they change jobs. Stapling is due to come into effect from 1 November 2021. 

Performance test

The introduction of an annual performance test that compares fund performance to a reference benchmark. At this stage it will apply only to MySuper default funds, and funds found to be underperforming will need to notify their members.

Best Financial Interests Duty

The legislation includes a requirement for superannuation trustees to demonstrate that all expenditure is in a member’s best financial interests.

What the changes mean for employers

 

From 1 November 2021, an employee will be linked to one super fund and they’ll take this stapled fund from job to job, unless they actively choose a different super fund.

This is a big change in how new employees join a super fund and creates additional complexity and paperwork for employers.

When you onboard a new employee, on or after 1 November 2021, and they don’t actively choose their own super fund, you’ll need to manually search for each new employee’s stapled super fund account via the ATO and manually update your payroll system with the employee’s stapled  account details. 

If an employee wants their super paid to a particular fund (including your default fund), they need to complete a Choice of Fund form and submit it to your HR/payroll team to action their request.

The new legislation has serious implications for employers in the building and construction industry given the potential impacts on insurance of workers.

Employers want to be confident that their employees are insured. If someone is new to the building and construction industry, they’re likely to be ‘stapled’ to a fund that doesn’t offer default insurance appropriate for the hazardous nature of their work and therefore be at risk of being uninsured in the workplace.

How stapling will work

 

Your new employee…  Your current onboarding process is… From 1 November 2021, you’ll need to…
has an existing (stapled) super fund and doesn’t choose a fund when they start employment. to open a new account for each employee in your default fund and make contributions to that fund.  use ATO online services to find the employee’s stapled fund and make contributions to it.
has no existing (stapled) fund and doesn’t make a choice of fund when they start employment. to open a new account for each employee in your default super fund and make contributions to that fund. use ATO online services to find the employee’s stapled fund and if advised that no stapled fund exists, make contributions to your default fund.
has an existing (stapled) fund but chooses a new fund by submitting a Choice of Fund form. to make contributions to the employee’s chosen fund. make contributions to the employee’s chosen fund.

What you need to do

  • You must provide a new employee with a Choice of Fund form (like our Cbus choice of super fund) within 28 days of them starting.
  • New employees can choose to join your default super fund or nominate their preferred super fund by completing a Choice of Fund form (like our Cbus choice of super fund).
  • If your new employee doesn’t make an active choice of fund, you’ll need to use ATO online services to determine their stapled super fund.
  • You must use ATO online services to determine a new employee's stapled fund. 
  • If a new employee has more than one super fund, the ATO will determine the employee’s stapled fund based on a set of rules. These may include factors such as when the account was created, how recently contributions were made and the account balance.
  • If a new employee doesn’t have a stapled fund and doesn’t make an active choice of fund, you must pay their super into your default super fund. 

Important – When you can request stapled fund information

  • You can’t use ATO online services to look for your new employee’s stapled fund if they haven’t started work. They must be employed by you when you request the stapled fund information. To make a request, you must have lodged either a Single Touch Payroll event or a TFN declaration. 
  • You can only request the stapled fund information for a new employee if they haven’t provided you with a Choice of Fund form.
  • When you request a new employee’s stapled fund information from the ATO, your new employee will receive notification of your request. 

If you’re onboarding over 100 employees at once

  • If you have over 100 employees starting at the same time, you won’t be required to complete an individual search for each employee’s stapled fund.
  • The ATO will provide a bulk upload service (via ATO online services) to allow you to make large volume stapled fund requests.  

Sounds like extra paper-work?

Stapling will create extra paperwork and will be a manual and labour-intensive process for all businesses, large and small.

For new employees who don't make an active choice of fund you'll need to use ATO online services and manually input every new employee’s name, address details, date of birth and Tax File Number. The ATO will provide details of the employee’s existing fund. You’ll need to note the existing fund and enter it into your payroll system for each new employee. This will be a manual, labour intensive process and you’ll need to account for the extra time required if you have lots of new starters

If the new employee doesn’t have an existing super fund and they don’t tell you which fund they want to join, you can join the employee to your existing default fund. In some cases this will be the default fund listed in the EBA. 

Insurance – Make sure your employees are covered

Stapling has serious implications for employers in the building and construction industry and for the insurance of workers on work sites.

If someone is new to the building and construction industry, they’re likely to be ‘stapled’ to a fund that does not offer default insurance appropriate for the hazardous nature of their work and therefore are at risk of being uninsured in the workplace.

Cbus’ insurance is cost effective and provides cover which many members would otherwise not be able to acquire, giving you and your employees peace of mind.

Importantly, Cbus has a Dangerous Occupation Exception (DOE) to provide default insurance cover for workers in hazardous industries, regardless of their age or account balance.

Cbus is one of seven super funds to provide a DOE and a worker stapled to a fund without a DOE is at risk of not having insurance that covers hazardous work.

The new stapling legislation makes access to insurance more complicated. Building and construction employees being insured through their Cbus membership removes that complication – simple fact is that they’re insured.

Workers often don’t find out they’re in a fund with exclusions until they make a claim. The claims time is not the right time for your employee to discover they don’t have that cover – unfortunately this can happen with exclusions. 

More information

Frequently Asked Questions

What is stapling?

Stapling is a process that will link a person to one super fund and the stapled super fund (or account) will follow the person from job to job, unless they actively choose a different fund. 

When does stapling take effect?

Stapling will take effect from 1 November and will change the way you administer super for new employees. 

Why has stapling been introduced?

Stapling encourages people to have one super fund so they’re not paying multiple fees and can maximise their retirement savings. 

Does stapling impact all of my employees?

Stapling only impacts new employees to your business who onboard after 1 November. It doesn’t impact the super arrangements for current employees.

What information should I provide to a new employee?

By law, you need to provide new employees with a Choice of Fund form (like our Cbus choice of super fund form) within 28 days of joining.

You can also provide a Product Disclosure Statement (and related documents) for your default arrangement if you like. However, you can't recommend that your new employee joins your default arrangement.

Can a new employee still make a choice of fund?

Yes. New employees can choose to join your default super fund or nominate their preferred super fund by completing a Choice of Fund form (like our Cbus choice of super fund form) – this is known as an active choice. 

Can a new employee choose to join our default fund?

Yes. If a new employee provides you with a Choice of Fund form, and chooses your default super fund, you should make contributions to the default fund.

How do I know which super fund my new employee is stapled to?

You must use the Australian Taxation Office’s (ATO) online services.

You’ll need to enter the new employee’s

·         Tax File Number (TFN)

·         full name

·         date of birth, and

·         address details

into the ATO online services to determine their stapled fund.

Once you’ve determined the new employee’s stapled fund, you must make contributions to that account. 

What if I’m onboarding 100’s of employees?

If you have over 100 employees starting at the same time, you won’t be required to complete an individual search for each employee’s stapled fund.

The ATO will provide a bulk upload service (via ATO online services) to allow you to make large volume requests. 

Why can’t my new employee tell me what their stapled fund is?

Your new employee may have more than one super fund. If this is the case, the ATO will use a set of rules to determine which is their stapled fund. These may include factors such as when the account was created, how recently contributions were made and the account balance.

When can I find out what my new employee’s stapled fund is?

You can’t use the ATO’s online search tool to look for a new employee’s stapled fund if they haven’t started work. They must be employed by you when you request their stapled fund information.

To make a request, you must have lodged either a Single Touch Payroll event or a TFN declaration. 

Will my new employee be advised that I’ve searched for their stapled fund?

When you request a new employee’s stapled fund information from the ATO, your new employee will receive a notification of your request. 

What if they have more than one super fund?

If your new employee has more than one super fund, the ATO will determine which is the employee’s stapled fund based on a set of rules. These may include factors such as when the account was created, how recently contributions were made and the account balance. 

What if they don’t have a stapled super fund?

If your new employee doesn’t have a super fund, they can choose their own super fund by completing a Choice of Fund form (like our Cbus choice of super fund form).

If they don’t have a super fund and don’t make an active choice of fund, you must pay their super into your default arrangement. 

What happens if I pay their SG contribution to the wrong account (not their stapled fund)?

If you pay an employee’s Superannuation Guarantee (SG) contribution to the wrong account, it won’t be classified as part of your SG obligation and you’ll need to repay this contribution into the correct account. 

Does stapling impact insurance arrangements for new employees?

Cbus insurance is designed for our members. Particularly those who work in dangerous working conditions.

If someone is new to the building and construction industry, they may be stapled to a super fund that doesn’t provide adequate insurance cover for the work they’ll be doing.

Everyone – regardless of whether they’re a Cbus member or not – should regularly check their insurance arrangements to ensure they have the right protection for them and their family.  

How does an employee change their stapled fund?

An existing employee can change super funds at any time by providing you with a completed Choice of Fund form (like our Cbus Choice of super fund form).

Are there any other Your Future, Your Super measures that impact my employees?

There are three major reforms as part of the Your Future, Your Super legislation:

Stapling

A new law ‘stapling’ a member to their first or current super account so that their super follows them when they change jobs. Stapling comes into effect from 1 November 2021.

YourSuper comparison tool

Introduced on 1 July, the YourSuper comparison tool helps people compare MySuper products and choose a super fund that meets their needs. The tool displays MySuper products ranked by fees and net returns, so people can compare funds in detail. 

Performance test

An annual performance test comparing super fund performance has been introduced. For the first year, the test only applies to MySuper products and more products will be included from 1 July 2022. If a fund fails the performance test, the fund has 28 days to advise members in that product and a notice will also be published on the fund’s website. If a fund fails the performance test for two consecutive years, they won’t be able to accept any new members until they pass the test.

Cbus has delivered strong long-term investment performance with our Growth (Cbus MySuper) investment option. And recently we recorded our strongest annual investment return of 19.34% for the Growth (Cbus MySuper) investment return^. See our latest investment performance results. 

Best Financial Interests Duty

All super fund trustees are required to act in the best financial interests of their members and provide members with key information on how we manage and spend their money in advance of Annual Members’ Meetings.

As an industry fund, we don’t have shareholders and all profits are returned to members. We know the work we do every day has a real impact on the amount of money our members will retire with. With transparency and accountability, our Annual Report shows how we continue to create value for members.

Do I still need a default fund?

Yes. From 1 November 2021 if a new employee doesn’t have a super fund and doesn’t complete a Choice of Fund form (like our Cbus choice of super fund form), you’ll pay their contributions into your default fund.

How do I contact the ATO?

The ATO has confirmed the employer request stapled super fund service will include a two phased approach:

Phase 1 – 1 November 2021

  • Employers will need to use the request stapled super fund service for employees who commence on or after 1 November 2021 and haven’t chosen a super fund.
  • A temporary solution for bulk requests of employee stapled fund details will be available for employers to use.

Phase 2 – 1 July 2022

  • A wholesale service will automate the interaction between employer’s payroll systems and the ATO when requesting stapled super fund details.
  • Uptake on phase 2 is voluntary.
  • Solution may be available earlier depending on design timelines with Digital Service Providers.

How Cbus can help

We’re here to help you stay on top of these changes to ensure you meet your super obligations.

Cbus insurance is designed for our members, particularly those who work in dangerous working conditions. Everyone – regardless of whether they’re a Cbus member or not – should regularly check their insurance arrangements to ensure they have the right protection for them and their family if the worst should happen.

If your employees have questions about their insurance cover, Cbus Advice Services are available to help by calling 1300 361 784 (Monday to Friday, 8.30am to 6pm AEST). There are no additional fees for this service - it’s part of being a Cbus member.

For more information contact:

 

Employer Services team 1300 361 784 (Monday to Friday 8am – 8pm AEST)

Livechat via Employer Online at cbussuper.com.au

Email EmployerRelationships@cbussuper.com.au

 

^As at 30 June 2021. Returns for investment options are based on the crediting rating. Cbus’ crediting rate is based on returns minus investment fees, taxes, and until 31 January 2020, the percentage-based administration fee. Excludes fees and costs that are deducted directly from member accounts. Past performance is not a reliable indicator of future performance.