News

Superannuation

Multiple accounts cloud stapled super rule

Multiple accounts stapled super

A technical expert has questioned how the existence of multiple retirement savings accounts for one person will affect the new stapled super rule announced in the budget.

The situation where an individual has multiple retirement savings accounts has raised questions about how the new stapled super rule, announced in the 2020 federal budget, will be executed, a technical expert has said.

“If the employee has multiple superannuation accounts, which one [will be] the stapled super account?” Accurium head of education Mark Ellem asked during the organisation’s post-budget webinar last week.

“Maybe the employee will be able to nominate one superannuation account, where they have multiple accounts, as the stapled account that will be used by employers.

“So it will be interesting to see how that will actually work in the new draft legislation.”

Further, Ellem recognised the budget announcement may cause great difficulties in its interaction with a separate existing ATO procedure.

“There could be inactive accounts in there that are in the process of being consolidated by the ATO because they are low balance and they’re inactive,” he said.

“Then if the employer picks [the inactive fund] as the stapled account and puts money into it, making it active now, then it no longer will be part of consolidation.

“[Thus it] would defeat the purpose of consolidating low and inactive balances. So again we’ll look for the detail in the draft legislation as to how those multiple accounts will be dealt with.”

The new stapled super rule specifies from 1 July 2021 employees will be able to have a single superannuation fund receive any super guarantee contributions for their entire working life.

It means employees will no longer have to have a new default superannuation account opened for them when they commence a new job if they did not nominate a fund of their choice.

The budget measure will be implemented using a two-phase process. Phase one will commence on 1 July 2021 and will see employers obtain information from the ATO as to an employee’s stapled fund should that person fail to provide this information to the organisation in question.

Phase two will commence on 1 July 2022 whereby communication between the ATO and employer payroll software will be automated.

The measure has been introduced with the intention of reducing the number of lost and inactive funds, as well as reducing expensive duplication superannuants have experienced to date.

Copyright © SMS Magazine 2020

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital