The ‘Your Future, Your Super’ reforms (YFYS Reforms) were passed in June 2021. They aim to improve the super system for members and to make your super work harder for you, allowing you to live better in retirement. There are four key areas which are explained below.
Stapling means you will keep your existing super account if you change jobs, unless you decide to change which fund manages where your super is invested. This is meant to make things easier, your super can follow you from job to job, removing the hassle of maintaining multiple super accounts, with potentially multiple fees and insurance premiums.
From 1 November 2021, a new super account won’t be created automatically every time you start a new job. You can start a new job knowing your employer and the Australian Tax Office (ATO) will ensure your super contributions will be paid into your ‘stapled’ account.
A new annual performance test will hold super funds accountable for underperformance. The performance test will compare a product’s investment returns with a benchmark return and fees – enabling members to compare fund performance. The results of the annual performance test will be reflected on the YourSuper website from 1 September each year. The results will be expressed as ‘performing’, ‘underperforming’ or ‘not assessed’.
Whilst performance has always been a primary focus, super funds will now be required to demonstrate with this additional layer of transparency that they’re aiming to provide the best outcome for their members.
The Best Financial Interest requirements are designed to “sharpen the focus” of super trustees, ensuring decisions, such as those on expenses, are in the best financial interests of members. There are also additional requirements for Trustees to make additional information available to members as part of the Annual Member Meeting.
We have set out below some frequently asked questions to help you navigate and keep up to date with the new laws.
From 1 November 2021, you will need to undertake a stapled fund search where each new employee from that date does not complete a Super Choice of Fund Form.
Where a new employee completes a Super Choice of Fund Form and selects to join the employer’s default fund, this will be considered as a valid choice and a stapled fund search is not required.
Failure to request a stapled super fund for employees, who have not made a choice, will mean an employer will have a Superannuation Guarantee shortfall and be required to report this in their Super Guarantee Charge Statement.
If the employee provides you with a completed Super Choice of Fund Form, you must pay to the chosen fund.
If the employee doesn’t provide you with a completed Super Choice of Fund Form, you must visit the ATO search tool to find a stapled fund for the employee.
If there’s no stapled fund for the employee, you must pay to your default fund.
Need more detail? Stapling process explained (PDF, 82KB)
From 1 November 2021, if your new employee doesn’t complete a Super Choice of Fund form, an online stapled fund form will be accessible for employers through the ATO’s Online Services.
Employers will need to enter information about their employees into the form and they will receive an online response once the form is processed. Employers who have not enabled online services will have the ability to access this information over the phone. Please note that the stapled fund measure only applies to employees who commence on or after 1 November 2021.
No. The stapled fund search will only be required for new employees joining your company on or after 1 November 2021.
No, stapling doesn’t override choice of fund. Your employees can nominate their preferred fund at any time using a Super Choice of Fund Form.
If an employee hands you a completed, signed Choice of Fund Form, you must pay to their nominated fund.
No, the ATO will provide an online search tool, and you will need to enter each employee’s details into the tool to find their stapled account.
You must do this even if your employee tells you what they think their stapled fund is, unless they complete a Choice of Fund Form.
The ATO will let you know when the ATO search tool is available.
If an employee provides a choice of fund to their employer, including choosing the employer‘s default fund, the employer should make contributions in accordance with the employees’ Super Choice of Fund Form. An employer only needs to request stapled fund details for employees who commence on or after 1 November 2021, where no Super Choice of Fund Form is received.
The ATO has advised that they are developing a bulk upload solution to help employers complete multiple stapled super fund requests at the same time. This is expected to be available from 1 November 2021.
The ATO have also informed us that they are working with Digital Service Providers in relation to a solution that can be integrated into payroll software by July 2022.
New employees are still free to choose a super fund, including their employer’s default fund. Stapling is only relevant when the employee does not make a choice or complete a Super Choice of Fund Form.
The ATO has advised their request service will have inbuilt rules to determine the stapled fund, which includes tie-breaker rules where multiple accounts exist. The basis for these decisions is outlined in the regulations. In the first instance it will be the account that last received an employer contribution. An employer will only have details of one fund returned to them by the ATO. Employees will also be able to see details of their stapled super fund in their myGov account.
The ATO has advised that they are working on an automated solution that will interact with the employer’s payroll system when requesting stapled super fund details. The ATO expects this automated solution to be available for use before July 2022.
The performance test applies to the MySuper product within the MLC MySuper Fund. This does not relate to other products or investment options your employees might be invested in.
Many employer plans receive administration fee discounts because of their size. The larger the employer, the larger the number of employees, which generally translates to lower overall fees. It is important to note that the performance test is based on standard fees. If employees are within an employer plan any applicable discounts or employer subsidisation arrangements are not reflected in the results of the test.
For more information on how we can help you, please contact your Relationship Manager. Or call us on 132 652.
More information from the ATO on the stapled fund request process can be found here:
Further details on Your Future, Your Super can be found here:
1 ChantWest, Multi-Manager Survey June 2021, 13 August 2021, MySuper Growth net returns for period to 30 June 2021, page 11
2 SuperRatings, Fund Crediting Rate Survey June 2021, MySuper Growth net returns for period to 30 June 2021, page 20
3 NULIS analysis based on SuperRatings, Fund Crediting Rate Survey March 2019 to June 2021
We appreciate the impact of events like these can be unsettling, and that everyone’s situation is different. We recommend you discuss your investment approaches with your financial adviser. If you do not have a financial adviser, please call us.