Super Changes Employers Should Know:
From 1st November, every Australian business will face significant new superannuation compliance obligations due to the Federal Government’s ‘Your Future, Your Super’ reforms.
The super reforms will help stop the creation of unwanted multiple super accounts that reduce members’ retirement savings. Your Future, Your Super, will ensure that a superannuation member’s account will be ‘stapled’ to them as they change jobs. New superannuation accounts won’t be automatically created when people change jobs.
Your Future, Your Super will make it easier for members to choose a well-performing product and actively engage with their superannuation. Australians will no longer have unintended superannuation accounts that result in multiple fees and unnecessary duplicate insurance premiums that reduce their retirement savings.
Improvements for Super Members:
It has been estimated that these changes should save Australians over $17.9 billion over ten years.
The changes follow a report published in 2019 by the Productivity Commission that found a third of super accounts, are not needed by members who already have a primary super fund.
Your Future, Your Super makes the superannuation system better for members in four key ways.
Key benefits are:
- Preventing the creation of unintended multiple super accounts.
- Helping members choose a well-performing fund that meets their needs.
- Holding funds to account for underperformance and boosting retirement incomes for millions of Australians’.
- Increasing transparency and accountability for how super funds use members’ savings.
Employee Super Stapling:
For the first time, employees will keep their super fund when they change jobs. An employee will now have their super fund ‘stapled to them’. Super account will follow employees from job to job. A new super account will only be created if an employee actively chooses another super fund. This is designed for the benefit of members, but it also represents a change in process for employers.
This impacts how businesses onboard new employees, depending on whether they choose a super fund. Rather than allowing the default of a new employee into your superannuation “default fund”, as of 1st November, payroll administrators will have to manually look up that employee’s fund by logging into the ATO online services and manually entering the employee’s details into the payroll system.
Onboarding Solution to Simplify Super Stapling:
ATS Onboarding eliminates the manual administration required by payroll teams to lookup an employee’s existing superannuation fund from the ATO. Within the onboarding workflow, every employee who goes through onboarding is required to choose the fund they want to be in and help them find their lost funds to consolidate.
Employees actively choose their super fund in the onboarding journey, and ATS automates the compliance process for an employer, validating the super fund.
When an employee is onboarding, they must select a superfund.
They have the option to:
- Select their existing super fund
- Select the company’s default super fund
- Select a superfund option provided within the onboarding journey
Because a person must choose a superfund, a person cannot passively default into a super fund.
After an employee selects a superfund in the onboarding process, they have an option to consolidate their existing funds (displayed on a single page). With integration into the ATO, ATS allows your employees to view their existing super funds (and amounts within each fund) and allows them to consolidate their funds into a single fund.
ATS Onboarding is designed to support Australian payroll and HR compliance, aligned to the Royal Commission’s recommendations for superannuation.
What Businesses Will Need to Do to Prepare:
The changes will not affect existing employees, it will change what your business needs to do when hiring new employees from 1st November 2021. To ensure compliance with the Your Future Your Super reforms, you will need to update your process.
New Employee Nominates a Super Fund:
If a new employee notifies their preferred super fund (using the Superannuation Standard Choice Form), employers must make payments into this account.
With our new integration with Flare HR, employees are now able to quickly and easily self-select their super fund during the onboarding process via the ATS Onboarding App. Super fund validation and finding employees lost super ensures business compliance with the new reforms.
New employees who are new to the workforce will be presented with a list of super fund options to nominate from as well as your company default fund.
Along with the employee’s super fund, their tax and bank account details are also validated, taking the hassle out of onboarding.
New Employee Doesn’t Nominate a Fund:
Employers will need to contact the Australian Taxation Office (ATO) to see if the employee has an existing super fund (a stapled fund). Once an account has been selected, employers must pay super contributions into the employee’s account.
Suppose they don’t have an existing super account and don’t choose a fund. In that case, employers are required to create a new account on the employee’s behalf and pay super into the nominated default superannuation fund.
Stay Compliant after Superannuation Reform Webinar:
Watch our Your Future, Your Super Compliance webinar. During the webinar, we will discuss the changes to superannuation, what this means for employers and employees and how you can manage compliance. The webinar will also demonstrate how ATS Onboarding ensures compliance with the new reforms.