Crackdown for employers dodging super stapling laws

Introduced by the former Coalition government, stapling is meant to lock workers in with a single super fund to stop the proliferation of multiple, and unintended, super accounts and the associated management fees. But this presents an administrative burden on businesses, which can only direct new staff into their default funds if they have no stapled account.

“Some employers are seeking to avoid stapling by requiring that new employees actively choose a fund during onboarding,” the consultation paper said. Onboarding can refer to signing new employees up to company finance, human resources and other services.

“This incentive to encourage active choice has led to an increase in onboarding software that presents employees with funds that have paid to be advertised. These issues can lead employees to make uninformed decisions, open inappropriate products and unintentionally create duplicate accounts.”

It proposed creating a new tax office service that employers and employees could use to confirm super fund details during onboarding, which means staff could nominate a fund or businesses could retrieve their account details.

It also suggested requiring businesses offer stapling as an option for employees from the outset during onboarding, meaning new staff just say if they want to stay with their stapled funds and the employer would then be required to get the required information from the ATO.

In an attempt to clamp down on an increase in super funds paying to advertise on onboarding platforms, Treasury also proposed banning any fund promotion.

“This would ensure that employees are not being encouraged into products which have paid to be advertised, may be unsuitable, and may unintentionally lead to duplicate accounts,” the paper said.

It follows accusations that accounting software giant MYOB funnelled members into Slate Super, an underperforming, high-fee superannuation fund it owned, through online marketing techniques which worked around stapling laws.

Under the payday super proposals, employers would have to pay employees’ superannuation entitlements at the same time as their salaries instead of the current quarterly arrangement.

Already flagged in the budget, the government hopes the move will help claw back some of the $3.4 billion super that is unpaid annually.

“[The reforms] build upon the government’s efforts to legislate an objective of superannuation: to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way,” Treasurer Jim Chalmers said.