The Australian Public Service Commission (APSC) has released guidance for Commonwealth employees on the Your Future, Your Super (YFYS) Reforms.
The Commission said its Circular 2021/06: Superannuation Stapling included information on new superannuation obligations for employers under choice of fund arrangements from 1 November.
It said the Circular also highlighted an issue that could affect the rate of employer superannuation contributions to new employees.
“The YFYS Reforms introduce the concept of a ‘stapled fund’ in order to limit the creation of multiple superannuation accounts for employees (including Australian Government employees) who do not choose a superannuation fund when they start a new job,” the APSC said.
“From 1 November 2021, where a new employee does not nominate a fund, employers will be required to contact the Australian Taxation Office (ATO) to request details about whether a new employee has a pre-existing stapled fund,” it said.
“If the employee has a stapled fund, contributions made to a fund specified by a workplace arrangement will not satisfy the choice of fund requirements of the Superannuation Guarantee (Administration) Act 1992.”
The APSC said this change would require employer contributions to be paid into the employee’s stapled fund rather than the employer’s default fund.
The Commission said the introduction of stapled funds would impact some Agency arrangements that provided a contribution rate of 15.4 per cent for members of the default Commonwealth fund, the Public Sector Superannuation Accumulation Plan (PSSap), or for those exercising super choice.
It said in the absence of explicit provision for a particular employer superannuation contribution rate in a workplace arrangement, employees in a stapled fund other than PSSap would only be entitled to an employer contribution rate equal to the Superannuation Guarantee rate specified in the Superannuation Guarantee (Administration) Act 1992, currently 10 per cent.
“It is not the intent of the legislation that employees in a stapled superannuation fund receive employer superannuation contributions at a rate less than that which is currently provided in Agencies’ workplace arrangements,” the APSC said.
“Agencies should examine their existing workplace arrangements and ensure the provisions applying to default and choice funds will also apply to stapled superannuation funds.”
It said a failure to review existing workplace arrangements and take remedial action could result in employees’ stapled funds not being entitled to superannuation contributions at the higher rate of 15.4 per cent.
The APSC’s two-page Circular 2021/6 can be accessed at this PS News link and further information on stapled funds can be accessed on the ATO’s website at this link.
