How stapling impacts new APS employees
‘Stapling’ comes into effect on 1 November 2021. This change means it’s more important than ever to check all new employees’ eligibility to join our super funds before they start their employment with you.
The Treasury Laws Amendment (Your Future, Your Super) Act 2021 became law on 22 June 2021, which implemented the Government’s Your Future, Your Super package. One element of the package is the stapling rule, which aims to limit the creation of multiple super accounts when an employee moves jobs. Read more
What is stapling?
Your Future, Your Super’s stapling rule aims to limit the creation of multiple super accounts among Australian workers when they change jobs. From 1 November 2021, employees will have their existing super fund ‘stapled’ to them when they change jobs. This means that one super fund will follow an employee from job to job, and contributions will be paid to that super fund, unless they explicitly decide to sign up for another super fund. This is in contrast to the current system, where when an employee changes jobs, their contributions are defaulted into their new employer’s chosen super fund, unless they nominate a different super fund. From 1 November 2021, those new to the workforce will be ‘stapled’ to the first super fund they join.
What does this mean for you, the employer?
As an employer, it’s important to know that stapling does not impact employees with defined benefit accounts, such as CSS and PSS. These defined benefit accounts are excluded from the stapling changes and cannot be stapled. The eligibility rules for CSS and PSS take priority over stapling, so you need to think about those eligibility rules to know which course of action to take.
If your new employee is required to rejoin CSS or PSS, then stapling will not impact them. You will need to let your employee know they are required to rejoin CSS or PSS.
If your new employee is not required to rejoin CSS or PSS, they’ll have a choice of fund. You’ll need to give them the super standard choice form so they can nominate a super fund. If they don’t nominate a super fund, you must check for a stapled super fund for your new employee, using the ATO’s online portal, before following your default rules. If a stapled super fund exists, you will need to pay super contributions to that stapled super fund. If no stapled super fund exists, you will need to pay super contributions to your default super fund. Depending on their circumstances this may be PSS, PSSap, or another default fund.
The good news is that there’s been no change to an employer’s default super fund because of stapling.
What’s changing with our eligibility rules?
While stapling doesn’t impact new employees who are required to rejoin CSS or PSS, it can impact other employees who have choice of fund.
|Before stapling came into effect||Now that stapling is in effect|
Where a new employee wasn’t eligible for CSS or PSS membership, PSSap was the default super fund for participating employers if that employee didn’t choose another super fund.
|You must now check for a stapled super fund using the ATO’s online portal, if your new employee doesn’t nominate another super fund. If no stapled fund exists, you can make contributions to your default super fund.|
|Full-time non-ongoing/temporary employees with a preserved CSS benefit, and who required a new membership in CSS, had choice of fund. If they did not nominate a super fund, they defaulted to PSS for APS agencies, and a default super fund (not CSS, PSS or PSSap) for non-APS agencies.||Your employee still has choice of fund. However, if your new employee doesn’t nominate another super fund, their stapled super fund takes priority. You’ll need to check if they have a stapled super fund using the ATO’s online portal before following your default rules.
To nominate CSS, your employee must still complete the S20 form.
PSS remains the default fund for APS agencies, if they don’t elect to join CSS or another choice fund, and don’t have a stapled fund that can accept contributions.
|Part-time non-ongoing/temporary employees with an interest in CSS, defaulted to PSS for APS agencies, and a default super fund (not CSS, PSS or PSSap) for non-APS agencies. CSS wasn’t an option (and still isn’t) because the employment type was ineligible.||Your employee still has choice of fund. However, if your new employee doesn’t nominate another super fund, their stapled super fund takes priority. You’ll need to check if they have a stapled super fund using the ATO’s online portal before following your default rules.|
|Casual employees with an interest in CSS, defaulted to PSSap for APS agencies and a default super fund for non-APS agencies. CSS wasn’t an option (and still isn’t) because the employment type was ineligible.||Your employee still has choice of fund. However, if your new employee doesn’t nominate another super fund, their stapled super fund takes priority. You’ll need to check if they have a stapled super fund using the ATO’s online portal before following your default rules.|
This information is for guidance only. For specific information regarding your obligations as an employer under the stapling regime please contact the ATO.
Other factors to consider:
PSSap (including PSSap Ancillary) memberships
On 7 March 2021, the rules around what contributions can be received in PSSap and PSSap Ancillary accounts changed. It’s important to properly understand these rules, because with stapling, a PSSap or PSSap Ancillary account may become the stapled fund for some new employees.
Before the changes, PSSap was a more restricted fund. You can read about the old rules here.
The new PSSap changes means there are two main categories of PSSap customers that you may interact with:
· PSSap customers who haven’t completed 12 continuous months of eligible employment*. These customers’ PSSap accounts can receive all types of contributions except employer contributions from ineligible employment.
· PSSap customers who have completed at least 12 continuous months of eligible employment*. There are no restrictions on the type of contributions that these customers’ PSSap accounts can receive.
PSSap Ancillary changes
The new PSSap Ancillary changes are similar to the PSSap changes. You can read about the changes here.
Under the new rules, to join PSSap Ancillary a customer must have previously been employed by an eligible employer for at least 12 continuous months*, and:
· currently be a contributing or preserved CSS or PSS customer, or
· have been a contributing CSS or PSS customer at any time on or after 7 March 2021.
Once a customer has a PSSap Ancillary account, there are no restrictions on the type of contributions that can be received. However, you cannot contribute to PSSap Ancillary if your employee’s employment arrangement means they are eligible for PSS or CSS contributions.
What does this mean for you?
When calculating the contribution amount payable for PSSap or PSSap ancillary accounts, you need to first determine whether your employee’s employment is eligible or ineligible:
· If in eligible employment (e.g. you are a designated employer and your employee is a permanent staff member), you’ll need to pay 15.4% contributions calculated in accordance with your Enterprise Agreement, except where you’re required to contribute a different amount, e.g. for statutory office holders.
· If not in eligible employment, you’ll need to contribute, at a minimum, the SG amount, or the amount specified in your Enterprise Agreement or the employee’s individual contract, as applicable. You may not be able to contribute this to PSSap – it depends on whether or not your employee has previously been in eligible employment for 12 continuous months*.
*Where a person has had multiple eligible employers, there must not have been a break between each period of employment for at least 12 months to meet the continuous service requirement.
Have a look at the below case studies we’ve prepared to help you navigate some complex situations.
Case Study 1
Pablo and Lan are both starting at the same participating employer on the same day. They have both completed more than 12 continuous months of eligible employment and have PSSap memberships. Pablo was hired as a public servant, under the Public Service Act 1999, whereas, Lan was hired as a contractor through a recruitment agency.
If Pablo nominates PSSap as his super fund, the employer will need to contribute 15.4% to PSSap. This is because his employment is ‘eligible’.
If Lan nominates PSSap as her super fund, the employer may only be obliged to contribute the SG amount as per her employment contract. This is because her employment as a contractor is ‘ineligible’. Lan’s employer may contribute more if they want to – it depends on what’s written in their employment contract.
Case Study 2
More case studies can be found here.
Security assessed clients
Some new employees may be classed as ‘security assessed clients’, potentially due to the nature of current or previous work. These people have been classified by the ATO for privacy reasons. For example, they may be flagged as sensitive cases, high-profile people (like politicians), ATO employees, etc.
If someone has been classified as a security assessed client, any check you do in the ATO’s online portal will not return a result (i.e. no stapled fund will be identified). This means you need to pay their contributions into your default super fund if they haven’t nominated another super fund.
Disclaimer: Any financial product advice provided in this website is general advice only and has been prepared without taking account of your personal objectives, financial situation or needs. Before acting on any such general advice, you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. You may wish to consult a licensed financial advisor. You should obtain a copy of the relevant Product Disclosure Statement and consider its contents before making any decision regarding your super.
Next I'd like to...
CSC has decades of experience guiding and supporting its government and ADF members.Learn more
Advice and Resources
We give you the resources to maximise your super and plan your retirement.Learn more
Family & Beneficiaries
Your family is important and understanding how to protect them if the worst happens can give you peace of mind.Find out more