Treasury reveals some employers actively avoiding super fund stapling

Some employers have been actively avoiding the superannuation fund stapling requirements by encouraging new employees to choose a particular fund, according to a Treasury analysis of how the new Your Future, Your Super (YFYS) regime is working.

What is more, Treasury has admitted that data limitations make it difficult to know precisely the effective of the stapling regime.

Explaining how the new stapling regime is going, Treasury said the Australian Taxation Office (ATO) had received nearly 290,000 stapled fund requests since commencement of stapling on 1 November, last year.

“Data limitations inhibit the ability to conclusively evaluate the efficacy of the stapling initiative, given the ATO does not receive data on how many new employees have elected a ‘choice of fund’ with their employer over the period,” the Treasury analysis said.

“Understanding the extent to which ‘choice of fund’ elections and default account openings are occurring as well as the number of successful stapled fund requests is imperative to determining the effectiveness of stapling.,” it said within the Consultation Document around its YFYS review.

However, it said “anecdotal evidence suggests that some employers have encouraged new employees to choose a fund (including the default fund) to avoid the stapling requirements”.

Treasury has also sought feedback on the actual, or likely, impact of stapling on insurance coverage.

While generally defending the purpose of the Best Financial Interests Duty (BFID) imposed on superannuation funds, Treasury has acknowledged there is a need to clarify whether the measures and particularly regulatory changes are improving compliance practices.

In doing so, it is asking stakeholders whether the reverse onus of proof imposed via the YFYS regime is the most appropriate way of achieving the objective of improving member outcomes.