New super rules that have been introduced mean employees are now ‘stapled’ to their existing superannuation fund, unless they choose otherwise. That’s why it’s more important than ever to consolidate your super and take control of your retirement savings. Here’s what you need to know about the super stapling rules.

From 1st November 2021, workers will automatically keep the same superannuation fund when they switch jobs, unless they actively nominate a new fund.

The reform aims to limit the number of superannuation accounts Aussies accrue over their working life. Under the old system, people often received a new super account every time they changed employers. That’s a problem because having multiple accounts eats away at your retirement income, due to the fees and premiums attached to each account.

Now that will be avoided, with Treasury estimating the change could save Australians about $2.8 billion in unnecessary fees over the next 10 years.

If you’ve done your homework and set up your super fund the way you want, being stapled to the one super fund can be useful. However, if you haven’t consolidated your super, or you’re not sure whether your fund is right for you, now is a perfect time to review your superannuation.

Which superannuation account will I be stapled to?

If you have more than one superannuation fund, you’ll automatically be linked to the fund that most recently received a contribution (active fund). That may not be the fund you prefer, or even the best fund for you, so it’s important to review your super.

How will my employer know which fund I’m stapled to?

When you start a new job, your employer is required to offer you a choice of superannuation fund by giving you a superannuation Standard Choice form to fill out within 28 days of starting work. If you don’t fill out the form, they’re now required to check an ATO database to see whether you have a stapled fund. If you do, they must pay your super contributions into that fund.

What if I don’t have a stapled fund?

If you don’t have a stapled superannuation fund, and you don’t nominate a fund of your choice, your employer must pay your contributions to a new account in their default workplace super fund. This will become your stapled superannuation fund and will follow you to your next employer.

Can I still change superannuation funds?

Yes, absolutely. Employees can still open a new superannuation fund whenever they choose to. If you want your superannuation payments to go into your new super fund, you’ll need to notify your employer, usually by filling out a super Standard Choice form. The new fund you select to receive your contributions will become your new stapled superannuation fund. You don’t need to do anything to change your stapled fund, it will update automatically.

Why it’s important to consolidate your super

Consolidating your super into one account makes it easier to manage and reduces the fees you pay. That results in a higher account balance when you retire, so it’s worth doing.

Consolidating your super now also means that you’ll have the correct super fund ‘stapled’ to your profile, so it will travel with you for life.

It’s easy to consolidate your super using the Australian Taxation Office’s (ATO) online services, accessed via your MyGov account.

Choosing your superannuation fund

Before consolidating your super, make sure you’ve done your research and chosen the best super fund for you. You can do this by comparing funds. For example, if you

already have one or more accounts, start by checking their performance over the last five to 10 years. Find out which investment option you’re invested in and think about whether it’s a good fit for your age and stage of life. Look into how much you’re paying in fees. And finally, you might like to know what your funds are being invested in, and whether it’s in line with your values.

But first, check your insurance

Before consolidating any of your super accounts, check whether you can get a similar level of insurance cover with your new super fund. Be aware that opening a new super account may have implications for your insurance cover and premiums.

For example, some, but not all, default insurance policies may consider your health when you joined the fund as the basis for calculating your level of cover and premiums. So there may be some benefit to maintaining policies that were taken out at an earlier age.

If you do switch funds later on, make sure that you can get the insurance you need and that the premiums are affordable for you. It’s always worth getting advice from a finance or insurance expert to make sure you have the level of cover that’s right for you.

Helping Aussies reach their superannuation target

Research shows that most Australians don’t have nearly enough super saved to put them on track for a comfortable retirement. We’re falling hundreds of thousands of dollars short by retirement age. The super stapling reforms are one small change that can help you hold onto more of your hard earned super contributions and build your retirement income.

But there is more you can do. Be proactive and take steps to engage with your superannuation now and you will make a real difference to your retirement income.

Money and Life
(Financial Planning Association of Australia)