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Why fixing onboarding in super could help you retire with more

Super Consumers Australia says the process should be easier.

Last updated: 04 December 2023


Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • When you start a new job, you have the option of keeping your super fund or choosing a new fund
  • The current process is complex and has led to many people accumulating duplicate accounts or joining dud funds
  • Super Consumers Australia says the government and ATO must make changes to make it easier for employees to keep their super in a single high-performing fund 

When you change employers, you're usually confronted with a mountain of paperwork. It's understandable if choosing a super fund is at the back of your mind. 

And when this process is confusing and convoluted, you can easily end up with an unwanted duplicate account or move into a lower performing fund. Both these outcomes will see you retire with less.

The government has been consulting on changes to super, including how onboarding works.

Super Consumers Australia says the ATO should provide streamlined and simple onboarding to make it easy for people to keep one high-performing super fund.

What does onboarding look like now?

Currently, there are multiple ways you can nominate your super fund for a new employer:

  • Fill out the ATO's paper 'Superannuation standard choice form'. To complete this form, you must complete eight personal data points. You also need to find the details of your fund (its Australian Business Number and Unique Superannuation Identifier), then obtain and attach a letter of compliance from them to stay with that fund. You can also select your employer's default fund – which is often presented as the easiest option – or nominate a self-managed super fund with this form.
  • Complete an employer-created paper form. As with the Superannuation standard choice form, your employer may pre-fill some details, including the details of their own nominated fund.
  • Use an online standard choice form. This option is accessible via the ATO's online services, linked to MyGov. In this case, you must print out the form and give it to your employer.
  • Use an online onboarding platform (more on these later).

This confusing list of options means that, generally, it's easier for new starters to pick the fund their employee nominates rather than choose their own, or stay with their current fund. 

Reforms to help prevent duplicate accounts

A relevant recent change to onboarding is 'stapling', which began in November 2021.

This reform means your super is 'stapled' to you when you move jobs, so that your employer has to check if you have an existing fund if you don't nominate one yourself. See our guide to stapling here.

If you don't fill out the standard choice form or give your employer details of your fund some other way when starting a new job, your employer will work with the ATO to ensure they're paying your super into your existing account. 

Your employer has to check if you have an existing fund if you don't nominate one yourself

This new rule means you can remain in your current fund by not submitting any super fund nomination or paperwork, but it's not clear this is an option.

Super Consumers Australia says this system is outdated. Instead, people should be able to choose to stay with their existing fund through a streamlined online system. The system should also refer people to trusted information sources if they do want to change their fund.

Why bad onboarding processes could cost you money 

An overly complex onboarding system may just seem like a hassle when you're changing jobs, but it can also lead to dire consequences for your retirement income.

When this process isn't clear, it's too easy to end up with unwanted duplicate super accounts.

This duplication could cost you dearly; the Productivity Commission found that a person who has one unintended duplicate account throughout their working life would retire with $51,000 less.

It's too easy to join an underperforming fund

Another major problem is that it's too easy to join an underperforming fund. Analysis from Super Consumers Australia found the difference between someone staying in a fund in the top 10% of performers and being in the median performing fund across their working life is at least $288,000 in today's dollars – a staggering amount.

Finally, having multiple unwanted super accounts makes it harder to track which disability insurance policies you're paying for, and may result in your insurance cover being cancelled as your account balance is eaten up in fees. It's also harder to plan for retirement when you're unsure how much super you have.

Onboarding software can be part of the problem

Increasingly, employers may use onboarding software provided by a third party. These can be digital platforms where new employees enter details and documents required for onboarding to sort out the details of how they'll be paid and where their super should go. 

We previously outlined how a widely-used software platform provided to employers by MYOB could be nudging users into Slate Super, an untested super fund with historically below-average returns, that was also linked to MYOB. MYOB has since updated its platform and cut ties with Slate Super.

What should an onboarding system look like?

Firstly, it should be easy to use. The onboarding process shouldn't prompt you to research your fund or to source documents simply to keep your super where it is. 

Super Consumers Australia supports the idea of the ATO providing a streamlined digital onboarding system. By prompting new employees to check their details, people could simply ensure their current fund details are correct, or opt-in to select a different fund. This set-up would also allow the ATO to integrate helpful tools it has already built into the onboarding process.

Prompting people to compare their fund with others during the onboarding system would be an important improvement to the process. The ATO has already built a tool to do this, the super fund comparison tool. Integrating this tool into onboarding would facilitate people doing a super 'health check', by checking their existing fund against other products. 

Prompting people to compare their fund with others during the onboarding system would be an important improvement to the process

Further, making it easy for people to consolidate any duplicate super accounts when they start a new job would also be a massive improvement. Again, this service already exists – the ATO offers it through MyGov. Building this into an ATO-provided onboarding system would help people close unwanted accounts, save money, and, ultimately, retire with more.

Finally, the law should ban funds from advertising during the onboarding process. Currently, onboarding platforms may feature super funds because they have paid to be included, rather than because they're good options to build up your retirement income. These funds may not have been subject to the annual performance test.

The government has already proposed this prohibition. "Banning advertising in this process needs to happen," says Rebekah Sarkoezy, policy manager at Super Consumers Australia. "The onboarding system shouldn't allow third parties to exploit the system's complexity for their own gain."

A simpler, better onboarding system for Australians

"For too long, Australians have been picking up unwanted super accounts, or joining underperforming funds when they go into new jobs because the process is so confusing," says Sarkoezy.

"We applaud these proposals to update the system, which will make it far easier to find, and stay in, a single high-performing fund and retire with more." 

We care about accuracy. See something that's not quite right in this article? Let us know or read more about fact-checking at CHOICE.

This content was produced by Super Consumers Australia which is an independent, nonprofit consumer organisation partnering with CHOICE to advance and protect the interests of people in the Australian superannuation system.

Stock images: Getty, unless otherwise stated.