What is stapling, and why is it good news?

Women talking over coffee

Australia's superannuation system is considered one of the world's best. It was ranked 4th in the world by the 2020 Global Pension Index, coming in behind Israel, The Netherlands and Denmark.

But there's always room for improvement. For example, many Australians still have multiple super accounts, which has been an area of concern for the industry.

In the past, if you switched jobs and didn't nominate an existing fund, a new super account would be created for you. This meant some people ended up with several accounts, paying fees for each one.

The new stapling legislation that comes into effect on 1 November aims to fix that problem.

What is stapling?

Stapling means your existing super account automatically follows you when you change jobs. That cuts down on paperwork, duplication, and means you're not charged a second (or third, or fourth) set of fees on your super. Your super payments will simply be automatically deposited into your existing account.

Think of it like a faithful old dog that comes with you when you move home. The previous system meant you picked up a new dog with every move, until you suddenly found yourself knee deep in beagles, schnauzers and poodles, all of them demanding your attention and needing to be fed and looked after.

Of course, you can still change super funds if you want to, but if you don't make an active decision about your super you're not penalised with additional fees and paperwork.

The Super Reforms Bill

Stapling is one aspect of the Super Reforms Bill that has been passed into law.

It is joined by three new measures:

  • A new YourSuper comparison tool to see how default MySuper products compare
  • A super fund's duty to act "in the best financial interest of their members," is now a legal obligation.
  • Underperforming super funds will be 'named and shamed'.

What does this mean for you?

In the short term, this new legislation shouldn't impact your super. The most direct change is the stapling of your super fund when you change jobs. But that simply means you'll retain your existing fund unless you opt to change.

In the meantime, see how our investment returns have performed over the previous 12 months.

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