Payday Super is a win for consumers. But employment onboarding remains a ‘hot mess’ 

Exploitative employment advertising risks adding 325,000 duplicate super accounts to the system each year, costing Australians up to $224 million in extra fees.

Today the Government introduced long-awaited legislation to require employers to pay super guarantee contributions at the same time as they pay their employees’ take-home wages. Super Consumers welcomes this important protection for employees but is concerned that the previously proposed consumer protections on super fund advertising during employee onboarding have been removed from the bill. The protections would have prevented employment onboarding platforms from including advertising for most super funds during the employee onboarding process. The timing and prominence of this sort of advertising risks driving people to create new, potentially high fee accounts to make their new employers happy.

“Finally everyone can get their super contributions paid promptly, something that good employers have been doing for a long time,” says Xavier O’Halloran, CEO of Super Consumers Australia. 

“But failing to include consumer protections for the employee onboarding process in today’s bill puts new employees at risk of having duplicate accounts with multiple fees. When people are starting a new job they are focussed on filling in forms quickly, so they can get on with their actual job. It’s a terrible time for people to be weighing up which super fund should manage their retirement savings. Even for those that do take the time to consider their options – basing this decision on a few advertisements, rather than using something like the ATO’s comparison tool, which compares the market, can lead to disastrous results.”

Duplicate accounts cost people money. When someone has additional super accounts they do not want, they pay needless additional fees and may pay premiums for insurance policies that they can never claim on. Treasury’s own modelling shows that allowing super funds to advertise on employee onboarding software risks adding about 325,000 more people with multiple super accounts every year, at a cost of up to $224 million per year. 

Super fund account stapling was introduced in 2021 following recommendations from the Financial Services Royal Commission and Productivity Commission to reduce the creation of unwanted additional accounts, but ATO data shows that the legislation hasn’t had much impact. In 2021, 25% of people had multiple accounts, and over three years of account stapling, 22% of people still have multiple accounts. As at 30 June 2024, there are 4 million people who have two or more superannuation accounts. This is in part because many software providers have designed systems that avoid the stapling obligations by pushing consumers to choose a new fund. 

“The first consumer protections aimed at putting an end to people having multiple super accounts were introduced four years ago, but have not solved the problem. Even worse, today’s draft legislation is a green light for employment platforms to sell consumers duplicate accounts,” said Mr. O’Halloran.

Laughably, stapling laws do not require an employer to let you know if you already have an account before asking you to make a decision about super when you start a new job. Since payroll software providers take money from super funds to advertise on their platforms, they have a vested interest in designing their software to take advantage of the power imbalance of starting a new job to push new employees into accounts they never wanted.

“We call on the Assistant Treasurer to prioritise the financial well-being of everyday Australians over commercial interests by introducing a complete ban on super fund ads during onboarding.”

Read our submission.