To help reduce duplicate super accounts, the government has introduced a system where you will keep your existing super fund when you change jobs – the super account will be ‘stapled’ to you.
If you’ve changed jobs multiple times over your working life, you may have multiple super accounts with different funds, all charging separate fees and insurance premiums.
In fact, 27% of Australians have more than one super fund. Every year, about 1.6 million people change jobs and and 470,000 people enter the workforce for the firs time. This leads to approximately 850,000 duplicate accounts being created¹.
From 1 November 2021, the government’s new reforms will help reduce duplicate accounts across the industry.
What is super stapling?
To help reduce duplicate super accounts, the government has introduced a system where you will keep your existing super fund when you change jobs – the super account will be ‘stapled’ to you. This super account will follow you from job to job. If you have more than one account, the ATO will decide which account you are stapled to (usually the one that last received a contribution or has the highest account balance).
How does it work?
1. You choose a super fund
If you choose a super fund, your new employer must contribute to your chosen fund.
When you start a new job, your employer may give you the opportunity to choose the super fund for your employer’s super contributions. Choosing a super fund is easy – you can do it online using your MyGov account, with the assistance of the Government’s new ‘Your Super Comparison Tool’, or you can complete a Superannuation standard choice form that your employer gives you. Most employees are entitled to choose their own super fund, but there are still a few limited exceptions to this general rule.
2. Your stapled fund (no chosen fund)
If you don’t choose a super fund, your employer must request the details of your stapled fund from the ATO. If the ATO provides your employer with the details of your stapled fund, your employer must contribute to that stapled fund.
3. Your employer’s default fund (no chosen fund and no stapled fund)
If you don’t (or can’t) choose your own super fund, and you don’t have a stapled super fund, your employer must pay your super into a super account they choose for you. This is your employer’s ‘default fund’.
Your super account that your new employer contributes to, then stays with you when you change employers (unless you actively choose another fund). This ensures that a new account is not created every time you change jobs.
But don’t worry, the choice is still yours. If you aren’t happy with your current super fund (whether chosen, stapled, or default) you can choose another fund at any time.
What are some of the benefits?
In addition to saving on fees, there are some other great benefits of having one super account.
- Easier to keep track of your super
- Continuing the insurance cover you have. This can often be a very important consideration because as we get older, suffer any poor health or illnesses, or our circumstances change, arranging new insurance maybe more difficult, and can sometimes be more expensive.
Things to consider
As mentioned, the legislation is designed to prevent unnecessary new accounts from being created when you change jobs. If you think you may have more super accounts than you need, you might want to think about whether consolidating them into one account is right for you and consider the following:
- Check any costs from withdrawing from your other accounts.
- Consider whether the insurance in your chosen super account is appropriate for you.
- Check if you have any special arrangements or have a defined benefit fund with benefits that will be lost if the account is closed.
You may have valid reasons as to why you may have more than one super account, which is completely OK, as it is your retirement savings and you are in control.
Next steps
To find out if you have more than one super account, you can check via the my.gov.au website. Select the Australian Taxation Office tab and look for superannuation in the drop down menu.
If you’d like to talk to somebody who can provide you with advice, please speak with your Pinnacle adviser.
¹ Australian Government, Your Future, Your Super ‘Reforms to make your super work harder for you’ October 2020 treasury.gov.au
² You can choose a new fund if you are entitled to choice. Your employer is permitted to reject your choice if you have chosen a fund for within the last 12 months.
Source: Colonial First State
