With the new year beginning, it is timely to reflect on how the Australian superannuation fund boards navigated 2025. Across our work independently evaluating the performance of superannuation boards with FUM (Funds Under Management) totalling more than $500B, we saw four significant challenges emerge that have been keeping the super sector up at night.
Regulatory Scrutiny
The highest priority for superannuation boards was reflecting and acting on increased regulatory scrutiny, particularly in governance and risk oversight. Prominent funds saw APRA impose license conditions and penalties. These actions flagged that APRA is expecting to see a significant uplift in governance and risk performance across the superannuation sector, bringing performance more into line with that expected at major banks and insurers (even while further work is needed in these sectors).
The challenge for super funds is they have grown rapidly, and can outgrow their systems, processes and, in some instances, the capabilities of their people. There can also be limited experience within management and on boards of good practices in the finance sector as a model for super funds to adapt and work towards. Forward thinking funds are accessing those who have been through the uplift in governance and risk oversight in the banking and insurance sectors to guide them in meeting the higher expectations now being placed on superannuation.
Assessing Skills and Diversity
The next highest priority was the focus on a rigorous, fit-for-purpose and benchmarked skills and diversity assessment process that informed effective board renewal planning to fill skills gaps, guide succession planning and uplift director development and education. Perhaps not surprisingly, the first proposal in APRA’s March 2025 governance review related to skills and capabilities, and we feel this is the area that could have the most significant impact on board effectiveness and performance if implemented by super sector boards.
Skills and diversity requirements differ commensurately with the size of the fund because as funds scale, the level of required sophistication and technical expertise grows significantly. Upskilling is usually needed in investments, commercial, finance, insurance, risk, legal and regulatory, corporate activity, technology and products, and the need is magnified as the fund’s investments, distribution and administration globalise and digitise.
In Australia, superfunds are particularly strong on broad skills such as governance, strategy and people and culture as well as members’ lived experience and stakeholder engagement. However, there is often reliance on one or two directors to bring specialist expertise and deep industry experience. Additionally, board representational structures can complicate these appointments, creating additional challenges for board effectiveness. Merged funds have additional skills and diversity considerations and often must adapt their composition post-merger to ensure that the board and committee membership continues to be fit-for-future. What might have been equitable and fair at the time of merger may not be the optimal composition three years down the track.
While gender diversity on superannuation boards is typically balanced, many boards lack sufficient age and cultural diversity to adequately reflect their members. And our work with Australian super fund boards also shows there can be insufficient balance in personality, experiential and cognitive thinking to promote diverse thinking and discussions.
All in all, this means that higher-performing boards are undertaking rigorous, fit-for-purpose and benchmarked skills and diversity assessments as an effective way to understand the strategic gaps so that succession and renewal planning is effective in addressing emergent gaps.
Writing Better Board Papers
The third highest priority for superannuation boards in 2025 was improving the utility of board papers, including better synthesis of management’s insights, and decreasing the volume of board and committee packs. Done well, board papers can inform and facilitate critical director thinking and constructive board and committee discussions. Poor papers however are synonymous with inconsistent messaging and breakdowns in trust and confidence between the board and management.
This year, we saw some CEOs and Company Secretaries rewriting papers, rather than curating and reviewing them, which is a poor use of their time and fails to build capability where it should be. We heard executives were frustrated that 20-25% of their time is consumed by writing board and committee papers – time that is not focused on running the business. We also heard about some directors spending up to a week reading board packs or alternatively, receiving board papers the night before the meeting which made it impossible to prepare properly.
At Blackhall & Pearl, we consistently find that training executives to write better board papers provides demonstrative positive impact on the quality, utility and volume of board and committee packs. This small investment in capability uplift can produce significant improvements in the standards of reporting and therefore the quality of information underpinning board decision making. And to be fair, while we saw significant need for uplift in the superannuation sector, this is true in many other sectors as well.
Making More Time for Strategic Discussions
The final key area of focus for superannuation boards in 2025 was prioritising time for deeper discussions on the critical and strategic priorities and thinking around the future-state of the fund. With the level of complexity, risk, regulatory responsibilities and market intensity all filling busy board agendas with items that largely require transactional thinking, we found Chairs hard pressed to carve out time for more holistic forward thinking on strategic directions, options and the ‘what-ifs’. These discussions also require a different mindset from directors, including a more connected engagement and open exploration of strategic issues with management as well as different types of information as fodder for the session. Additionally, we found these issues cannot be effectively considered if they are relegated to only the annual strategic retreat.
Increasingly, high performing boards are separating deep dives from board and committee agendas to provide time and space to test the strategic thinking and future states. Done well, these sessions allow management to leverage the board’s thinking and provide a tract on how future board and management discussions and decisions can propagate. Executives that we work with openly embrace this kind of challenge and proactive framing to get to better decision making. Directors must see these sessions as a critical part of the board’s strategic alignment, not just as educational or knowledge building sessions.
While each board we work with is unique, it is not a surprise that these four priorities are front of mind for many leading superannuation fund boards.
2026 will bring new regulatory priorities (think payday super and retirement covenant pulse checks), heightened emerging and interconnected risks, further aging in the demography of members, cyber events, AI disruption to operating models, market turbulence and inorganic growth opportunities (and threats). If funds can improve their performance through focus on the four priorities raised in 2025, it will place them in good stead to respond to challenges and pressures ahead in the year ahead.
