From 01 November 2021, ‘fund stapling’ (as legislated by the Federal Government) comes into effect. As an employee, what is ‘fund stapling’ and what does this mean for you?
What is 'fund stapling'?
Fund stapling means that when you change jobs, your current super fund follows you to your new job. In other words, your current super fund is ‘stapled’ to you.
Your employer and the Australian Tax Office (ATO) will ensure your compulsory super contributions get fed into your existing fund – you don’t need to pick a new one every time you move jobs. Importantly, you can change your fund if you want to.
Whether you choose a fund or take a default fund offered by your employer, you need a fund that suits your long-term needs.
Fund stapling (or stapling) is designed to stop you ‘collecting’ multiple super funds throughout your career.
This will help you avoid multiple sets of fund administration fees and less paperwork, making it easier for you to keep track of your super – along with reducing the chance of paying multiple insurance premiums.
Multiple super funds?
How do you know which one is your stapled fund?
If you hold several superannuation funds, the ATO will use the following process to determine your stapled fund:
- If there’s no recently stapled fund, the fund which has received the most recent contribution will be chosen as the stapled fund.
- If there’s no eligible fund that has received a contribution recently, it’ll go to the highest account balance as at the end of the last financial year.
- If there’s still no eligible fund, the ATO can choose what they believe to be the most appropriate fund out of the list.
What does this mean when you change jobs?
If you change jobs, you still have the option to nominate your own super fund for your superannuation guarantee contributions.
If you don’t make a choice of super fund, your new employer will need to go to the ATO to get details of your stapled fund. If you have a stapled fund, they need to contribute to that fund unless you choose a different super fund.
We believe these latest super reforms simplify super and give members more information – and will ultimately help people better manage their super and save for retirement. If you need help sorting your super, feel free to get in touch with us at The Peak.