Retirement
Employment Hero raises concerns over superannuation bill's impact on small businesses
Retirement
Employment Hero raises concerns over superannuation bill's impact on small businesses
Employment Hero has raised significant concerns regarding the implementation of the proposed Supporting Choice in Superannuation and Other Measures Bill, which was recently recommended for passage by the Senate Economics Legislation Committee without amendments. The Bill aims to tackle the issue of duplicate superannuation accounts, but Employment Hero's technical modelling reveals potential challenges that could adversely affect Australian small businesses and their employees.
Employment Hero raises concerns over superannuation bill's impact on small businesses
Employment Hero has raised significant concerns regarding the implementation of the proposed Supporting Choice in Superannuation and Other Measures Bill, which was recently recommended for passage by the Senate Economics Legislation Committee without amendments. The Bill aims to tackle the issue of duplicate superannuation accounts, but Employment Hero's technical modelling reveals potential challenges that could adversely affect Australian small businesses and their employees.
The crux of the issue lies in the Australian Taxation Office's (ATO) current system settings, which are crucial for the Bill's execution. According to Employment Hero's data, the mandatory stapled fund lookup could fail for 55% to 80% of digital onboards. This failure could result in a "superannuation blackout" for nearly 1.9 million workers annually, leaving them without any information about their existing superannuation funds if the ATO lookup fails.
Rob Dunn, General Manager of Payments, Superannuation, and Benefits at Employment Hero, elaborated on the potential consequences. "Employment Hero remains committed to working constructively with the Government and the ATO to deliver on the intent of this Bill, strengthening super choice and reducing account duplication," he stated. "Superannuation is often the most significant financial asset Australians will hold to secure their future, with important compounding benefits that accumulate over a working life. This makes clarity and accuracy at the point of employment critical."
Dunn further explained the technical challenges, noting, "However, we cannot ignore the significant technical gap that exists today. Schedule 2 of the Bill requires digital platforms to display an employee’s stapled fund before showing any other information. While this sounds reasonable in theory, current ATO processes and data gaps mean this lookup is estimated to fail for 55% to 80% of digital onboards."
The failure of the ATO lookup could lead to workers being funnelled into employer default accounts, potentially creating over 300,000 new duplicate accounts every year. This outcome contradicts the Bill's primary objective of reducing account duplication. Dunn warned, "If the law proceeds as drafted, up to 1.9 million workers annually will face a superannuation 'blackout', seeing zero information about their existing funds if the ATO lookup fails. Instead of seeing a verified existing fund they already hold, they will be funnelled into an employer default account."
The looming 1 July deadline for the Bill's implementation poses an additional challenge for small businesses, coinciding with the commencement of Payday Super. Dunn highlighted the administrative burden this will place on employers, stating, "With the Committee backing a 1 July deadline, the implementation cliff is mere months away and coincides with the commencement of Payday Super. For employers, this represents a significant additional administrative burden at a time when many are already navigating complex compliance changes."
Employment Hero has been proactive in advocating for transparency and employee protection. Since 2023, the company has voluntarily adhered to a 'Super Choice Code of Practice', ensuring that only superannuation products passing the annual APRA performance test are presented to employees. This initiative aims to provide employees with clear, factual disclosures to support confident decision-making.
To address the identified technical gap, Employment Hero is urging the Government to consider a pragmatic solution. Dunn proposed, "We urge the Government to consider a simple, factual refinement: if the technology gap prevents a stapled fund from being returned, permit a 'Best Available Information' fallback. This would allow digital service providers to show a worker's verified existing fund so their super stays where they want it."
He emphasised that this approach is not about advertising but providing a factual fallback when ATO systems cannot return a result. "Showing an employee a fund they already hold is not advertising; it is a factual fallback when ATO systems cannot return a result. Let’s ensure the technology works before we lock it into law," Dunn concluded.
Employment Hero's full submission to the Senate Economics Legislation Committee inquiry includes detailed technical modelling behind these figures, offering further insights into the potential impacts of the Bill's current form.
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