Since the Your Future, Your Super reforms of 1 November 2021, an employee's stapled super fund follows them through job changes instead of a new default account opening each time. This reduces fragmentation and preserves existing insurance, but it also means an outdated or underperforming fund choice can persist. Employees can override stapling at any time by actively choosing a different fund when starting a new job.
For Australian employees in their 50s and 60s changing jobs in the run-up to retirement, the rules around super contributions have changed in important ways since the Your Future, Your Super (YFYS) reforms commenced 1 November 2021. Before YFYS, every job change without active fund choice produced a new super account at the employer's default fund. Over a working life of several jobs, this fragmented retirement savings — multiple accounts, multiple sets of fees, multiple bundles of default insurance, and the administrative burden of consolidating before retirement. The Productivity Commission and others identified this as a major friction in the system. Stapling was Treasury's response: a single super fund "follows" the employee through job changes unless the employee actively chooses a different fund.
How does the stapling mechanism actually work?
The mechanism is straightforward. Each employee with an existing super account has a stapled fund — typically the most recent active super fund associated with the employee's tax file number. When a new employee joins an employer, the employer first offers the standard choice form giving the employee the option to nominate a fund. If the employee chooses a fund, SG flows there. If the employee doesn't choose, the employer checks the ATO through online services for business and identifies the employee's stapled fund. SG flows to the stapled fund. Only where no stapled fund exists does the employer's default fund apply. The new employer no longer opens a new account at their default fund unless the employee has no stapled fund — a much narrower scenario than under the pre-stapling system.
What does stapling mean for pre-retirees specifically?
For pre-retirees changing jobs in their late career, stapling has several specific implications. Less account fragmentation — each job change no longer opens a new default account; the existing single account continues to receive SG. Continued exposure to existing fund choice — the fund the pre-retiree was last stapled to follows them, regardless of whether it remains the optimal fund for current circumstances. Insurance carry-through — default insurance attached to the stapled fund continues, generally favourable for pre-retirees who would otherwise risk losing existing TPD, life, or income protection cover at the old fund. Existing employer fund features — where the prior employer had a corporate fund with specific features (negotiated fees, tailored insurance, professional input), stapling to that fund continues those features that don't depend on active employment.
What is the late-career strategic decision?
The late-career strategic decision at a job change isn't whether to be stapled — that's the default — but whether to actively choose a different fund instead. Active choice overrides stapling. Pre-retirees changing jobs should consider whether their stapled fund is appropriate for the pre-retirement and retirement window. Performance — has the fund been a strong long-term performer? Fees — are the fees competitive given the account balance? Insurance suitability — does the cover suit the late-career circumstances (often less life cover, more tailored TPD, possibly no income protection)? Investment options — does the fund offer the strategy that suits the pre-retirement glide path? Where the answer is the fund still suits, stapling continues smoothly. Where the answer is a different fund would suit better, active choice on starting the new job overrides the default.
What do the practical scenarios look like?
A few practical scenarios illustrate the dynamic. Scenario 1: Pre-retiree leaving long-term employer with corporate super fund. Stapled to the corporate fund. New employer's SG flows there. Some corporate fund features may lapse on leaving employment (subsidised insurance, employer-paid administration fees). Review whether to remain stapled or actively choose a personal super fund. Scenario 2: Pre-retiree taking encore career or part-time work post-corporate retirement. Stapled to most recent fund — perhaps an industry or retail fund chosen earlier. The small SG from the new role flows there. Generally fine; consolidation review may still be appropriate. Scenario 3: Pre-retiree starting consulting or contracting work as the primary engagement. Where genuinely self-employed, super contribution responsibility shifts to the individual. Where the contract falls within Personal Services Income (PSI) rules and is treated as employee-style, stapling applies to that portion. Scenario 4: Pre-retiree across multiple casual or seasonal jobs. Stapling means each job's SG flows to the same single fund — no fragmentation despite multiple employers. Scenario 5: SMSF as primary super. SMSF can be the stapled fund where appropriate trustee declarations are in place. Some employers find SMSF processing administratively complex; active fund choice ensuring the SMSF is selected supports clean SG flow.
How does stapling interact with the performance test?
The rules interact with the YFYS performance test for MySuper products. Funds that fail the test are required to notify members and (after two consecutive failures) cannot accept new members. The performance test interacts with stapling — a pre-retiree stapled to a fund that fails the performance test should consider switching, even though stapling itself doesn't automatically move them out. The annual performance test result is published and worth checking for the stapled fund.
What practical steps apply at a late-career job change?
For late-career transition planning, several practical observations apply. Audit existing super arrangements at the time of job change. What's the stapled fund? Is it the best fund for retirement readiness? What insurance is attached? What are the fees? Decision: consolidate or maintain. Consolidating to a single high-quality fund simplifies retirement administration. Maintaining multiple funds may suit specific scenarios — insurance retention reasons, fund-specific features. Active fund choice when changing jobs — where the stapled fund isn't the desired fund, the active choice on starting the new job overrides stapling. Insurance review — late-career insurance needs (TPD, life, IP) often differ from earlier-career needs; right-sizing cover for the pre-retirement window is appropriate. Salary sacrifice arrangements — these are separate from stapling; new employer transitions require re-establishing salary sacrifice with the new employer.
What common pitfalls should pre-retirees avoid?
A few common pitfalls to avoid. Assuming new employer creates a new default account — they don't; stapling means SG flows to the existing stapled fund unless actively chosen otherwise. Not reviewing the stapled fund for current suitability — stapling perpetuates a fund choice made (perhaps by default) earlier in the working life. Letting insurance lapse from corporate fund features that depended on active employment. Multiple funds despite stapling — pre-retirees with legacy accounts from pre-stapling era may still benefit from consolidation. Not setting up salary sacrifice with the new employer — stapling addresses SG; salary sacrifice is a separate arrangement.
For Australian pre-retirees changing jobs in their late career, super stapling is the rule that quietly governs the default behaviour. Most of the time it works well — preventing fragmentation, continuing insurance, simplifying administration. But the active choice option remains available, and at the moment of job change, a deliberate review of the stapled fund's suitability is one of the higher-leverage retirement-readiness moves available.
Sources
- ATO — Stapled super funds for employers
- ATO — Offer employees a choice of super fund
- ATO — Superannuation standard choice form
- ATO — Independent contractor stapled super fund request form
- ATO — YourSuper comparison tool
- Moneysmart — Choosing a super fund
Key takeaways
- Since 1 November 2021, a new employer's SG contributions flow to an employee's existing stapled fund by default, instead of opening a new account, unless the employee actively chooses a different fund.
- Stapling reduces account fragmentation and generally preserves existing default insurance (life, TPD, income protection) that would otherwise be lost at a new default fund.
- The trade-off is that stapling perpetuates whatever fund choice was made earlier in a member's working life, even if that fund is no longer the best option for the pre-retirement window.
- Active fund choice always overrides stapling — at any job change, a pre-retiree can nominate a different fund on the standard choice form instead of being stapled to their existing fund.
- The annual YFYS performance test result for a stapled MySuper product is worth checking — stapling itself won't move a member out of a fund that fails the test.
Frequently asked questions
What is super stapling and when did it start?
Super stapling, introduced under the Your Future, Your Super reforms from 1 November 2021, means an employee's existing super fund 'follows' them to a new job by default, instead of a new default account being opened each time they change employers.
Can an employee choose a different fund instead of being stapled?
Yes. Active fund choice always overrides stapling. When starting a new job, an employee can nominate a different fund on the standard choice form, and SG contributions will flow there instead of to the stapled fund.
Does stapling protect existing insurance when changing jobs?
Generally yes — because SG continues flowing to the same stapled fund rather than a new default account, any default insurance (life, TPD, income protection) attached to that fund continues, avoiding the risk of losing cover at a fresh account.
Why should a pre-retiree review their stapled fund at a job change?
Stapling perpetuates a fund choice that may have been made years or decades earlier by default, without regard to current performance, fees, or suitability for the pre-retirement window. A job change is a natural checkpoint to review whether the stapled fund still suits, or whether active choice of a better fund is warranted.