What you need to know
It’s been a busy time in the super industry the last six months with major legislation changes making their way through parliament. While none of these proposed changes have come into effect yet, we wanted to give you a breakdown of what you need to know and how these changes could impact you and your organisation.
Through Account Stapling the Government wants to ensure a new superannuation account is not automatically created every time an employee starts a new job. This is intended to reduce the number of multiple superannuation accounts and to help avoid any duplicate fees and insurance premiums on multiple unintended accounts.
For employers, Account Stapling will require you to source, from the ATO, a new employee’s ‘stapled account’ rather than defaulting them into a super fund. This only applies if a new employee does not provide a choice of super fund through your onboarding process.
The legislation is currently being reviewed by the Senate Economics Committee, with a proposed implementation date of 1 July 2021. While this implementation date is ambitious and much of the regulatory detail surrounding Account Stapling is yet to be defined, it is important for employers to understand the proposals and the associated impacts.
What does Account Stapling involve for employers?
- If a new starter does not choose their own super fund, employers will need to manually search for each new employee’s stapled account via an ATO Portal, one at a time. This will in time be offered as an integrated service, should your payroll system allow (contact your provider for updates).
- If an employee does not have a stapled account (e.g. 1st job or migrants) then contributions will be made to the company’s default fund unless the new employee chooses another fund.
Employers need to get ready for stapling
With the proposed legislation potentially coming into effect on 1 July, there will be little time for employers like yourself to get ready. And the impacts on your organisation could be significant, as there may be a requirement to manually search for each of your new employee’s stapled super fund details in the ATO’s system.
In light of the significant administrative burden that Account Stapling will place on our employers, we are looking to develop digital support services and tools that may assist employers with their on-boarding processes. We believe these new services and tools may help alleviate the pressure Account Stapling could place on your payroll team. If you’d like to discuss the benefits our proposed system could provide to your onboarding and payroll process, get in touch with your dedicated relationship manager or give us a call on 1800 878 737. We’re more than happy discuss exactly how we can improve on the support we already offer to you as a strategic partner.
Super fund performance test
This is effectively a name and shame provision for underperforming super funds. If identified as an underperforming fund, Super funds would be required to write to their members. This could see a number of your employees changing funds if their funds are identified as underperforming. If your default fund is identified as underperforming two years in a row, it will no longer be able to accept contributions. In this case, the regulator APRA will advise the Fair Work Commission – you may need to consider your options if that occurs.
Given VicSuper’s current performance as of 31 January 2021, we would not be on the list of underperforming funds and in fact, continue to be rated as a top 10 performing fund over 1, 3, 5- and 10-year periods*.
We will be on hand to help alleviate your employee’s concerns by continuing to offer all staff access to education, guidance and advice regardless of whether they are an VicSuper member or not.
Member’s best financial interest
This applies a stringent test to ensure value for money from all marketing, partnership and sponsorship activities undertaken by super funds.
We’re here to help
If you have any questions about these changes and how they could impact you, get in touch with your dedicated relationship manager or give us a call on 1800 878 737.^SuperRatings Fund Crediting Rate Survey, January 2021. SR50 Balanced (60-76) Index. The VicSuper FutureSaver Growth (MySuper) option was a top-10 performer over the 1, 3, 5, 7 and 10-year periods to 31 January 2021. Past performance is not a reliable indicator of future performance.
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