A Treasury review of super reforms introduced last year includes examining “any unintended consequences and implementation issues” from the stapling measure since its commencement on November 1.

Feedback is sought on the measure’s “actual, or likely, impact” on life insurance coverage and any barriers in the current framework to achieving the intent of stapling, Treasury says in the consultation paper released last week.

The stapling measure is a recommendation from the Hayne royal commission’s final report in 2019 to the then Coalition government.

Stapling seeks to prevent the creation of unintended multiple superannuation accounts when disengaged members change jobs and open a new account by default, the paper says.

“Unintended multiple accounts result in members being subject to multiple sets of account fees and potentially duplicate insurance arrangements which ultimately erode retirement savings.”

Financial Services Minister Stephen Jones said in July that the Labor Government backs the stapling measure and that the review of Your Future, Your Super reforms “will not unwind” the move.

Before the stapling measure was introduced, when an individual changed jobs and did not choose a preferred superannuation fund, the employer could open a new superannuation account for the employee using the employer’s “default” fund.

“Stapling adds an additional step for employers who must now check whether an employee has an existing (‘stapled’) super fund with the [Australian Taxation Office] before making super contributions,” the consultation paper says.

“Employers may have to pay a choice shortfall penalty, which is additional super guarantee charge, if they contribute to a default fund without making a stapled super fund request.

“This is designed to ensure that where an employee does not choose a fund, their existing superannuation account follows them to their new job, rather than opening a new additional default account.”

The paper says the tax office has received nearly 290,000 stapled fund requests from the commencement of stapling on November 1 to June 30 this year.

“Anecdotal evidence suggests that some employers have encouraged new employees to choose a fund (including the default fund) to avoid the stapling requirements,” the paper says.

The review is also examining the best financial interests duty, YourSuper comparison tool and performance test of MySuper products.

Closing date for consultation is October 14.

Click here for the consultation paper.