What should Super Trustees do now to navigate 2025’s risks?

6 minute read  03.02.2025 Edwina Star and Ruth Stringer

Recent events and the impending due date CPS 230 and FAR have put Superannuation Trustees, Boards, and Management on notice. We outline the 7 things Trustees should do now to help navigate the challenges of 2025.

For the first time in history, we have a generation of individuals who will have a substantial nest egg upon retirement. Superannuation has never been more significant or powerful, with super funds owning about 20% of the ASX by value. The retirement income covenant, which came into effect in July 2022, places a positive obligation on trustees to assist members in or approaching retirement to improve outcomes.

The superannuation sector, particularly industry super funds, were largely untouched through the Royal Commission but, APRA and ASIC have indicated they have become increasingly frustrated by the super funds' failure to service their members and as a consequence have signalled their intent to remain sharply focused on the industry.

Recent events and the impending due date of the Operational Risk Management standard (CPS230) and the Financial Accountability Regime (FAR) have put Trustees, Boards, and Management on notice that:

  • Risk Management is not a nice to have…and compliance is a given – As superannuation funds have grown both in size and importance, their approach to risk must evolve to keep pace with change. With increasing regulatory scrutiny and evolving market conditions, it is crucial for these funds to have robust and continuously improving and evolving risk management and compliance frameworks in place.
  • It’s ok to find issues, how and when you deal with them is more important – Superannuation funds rely heavily on the trust and confidence of their members. Identifying issues is pivotal, but how and when they are addressed is even more important. It is acceptable to find issues; in fact, it is expected. The key is to deal with them promptly and effectively. Issues must be raised clearly, timely, and frankly, without any motivation to hide them from the Board. This transparency allows for swift action and resolution, minimising potential negative impacts on the organisation and its members. ASIC has been clear that time is up on super fund directors taking the backseat on service or other types of issues. It recently warned that they were just as accountable for problems at the funds they oversaw as directors of big listed companies were.
  • Directors and Management are accountable and clarity on who, what and how is imperative as are the right skills around the table – Accountability is paramount, and clarity on who, what, and how is imperative. Directors have always had fiduciary responsibilities, but the emphasis on accountability is increasing particularly with the implementation of FAR in March 2025. It is essential to have a well-defined structure, linked to critical processes (as per CPS 230) that outlines the specific duties and expectations for each role within the organisation. This clarity ensures that everyone understands their responsibilities and can be held accountable for their actions. Equally important is having the right skills around the table at an Executive and Board level.
  • You can outsource your services but, not abdicate responsibilities – Superannuation funds can outsource various functions to third-party providers or related parties, but they must retain ultimate responsibility for those services. This means that trustees and management understand the nature and extent of services outsourced, that their expectations in delivering those services are clear and that there are robust oversight mechanisms in place. They must also be prepared to address any issues that arise from outsourced services, maintaining accountability for the outcomes even if the services are provided by related parties.
  • Member centricity goes beyond data and reporting – Superannuation funds must prioritise member engagement to build trust and loyalty. A key tenet that all superannuation trustees must adhere to is putting the member first or at the heart of key decisions. Key moments that matter, such as time of claim, when a member complains or when something goes wrong are opportunities for meaningful engagement. Data and reporting can only give you so much; spending time with front-line staff, listening to complaints and understanding claims is crucial for Directors as it provides valuable insights into the organisation's operations and culture. Listening to customer complaints can provide insights into areas where the company can improve its products or services. Complaints and long-standing outstanding claims often highlight systemic issues within the organisation. By understanding these, Directors can work with Management to implement changes that address the root causes, bottlenecks and customer service approaches can lead to long-term improvements

What Trustees, Boards and Management should be doing right now:

The superannuation sector's growing influence and the evolving regulatory landscape mean that risk management and compliance have never been more important. Trustees, Boards, and Management must be vigilant, proactive, and accountable to ensure positive outcomes for members and maintain the integrity of the sector. Things you should be doing right now include:

  1. Look Outside In: Manage identified risks and consider existential risks. Be prepared to answer how your fund avoids issues seen in others. Demonstrable consideration of these risks is expected by regulators and key stakeholders.
  2. Keep Asking Questions: Continuously seek further actions or information until satisfactory responses are received. Trust your instincts—if something feels off, more questions need to be asked. Where you are still dissatisfied seek objectivity or independence.
  3. Seek and Find: Ensure reporting templates and cover sheets highlight key issues. Create an environment where issues are raised clearly and timely. Reporting from management can be long and arduous, but it is essential to find the needle in the haystack.
  4. Think of Members: Understand the root cause of issues and consider whether or if the entire member pool or other cohorts have been impacted. Prioritise finding all affected members, any potential vulnerable members and preventing recurrence. The Trustee Board's role in overseeing remediation activities is crucial.
  5. Listen to Members: Go beyond data to understand member experiences. Spend time with front-line claims and complaints managers to grasp challenges, potential bottlenecks, and the true member experience.
  6. Use your Risk Appetite Statement (RAS) and profile as the strategic tool they are intended: Monitoring against your RAS and broader risk profile is intended to be dynamic and reflecting both the internal and external environment. Ensure controls and monitoring is in place and dedicated time should be spent understanding and discussing movements and their potential impact and any changes needed to prevent events and/or the delivery of the organisational strategy.
  7. Ensure skills and attitude align to strategic direction of the fund: Regularly assess and challenge if the right skills are present around the table. This goes beyond merely meeting the baseline compliance requirements for fitness and propriety. It involves ensuring that the Board and Management has a diverse mix of skills, experiences, and perspectives that are relevant to the current and future needs of the superannuation fund. This ensures that they are well-equipped to address emerging challenges and opportunities.

To ensure this, trustees should:

  • Conduct Regular Skills Assessments: Regularly assess the skills and competencies of Board members to identify any gaps and areas for improvement.
  • Implement Succession Planning: Develop and implement robust succession plans to ensure continuity and the availability of necessary skills.
  • Provide Ongoing Training and Development: Offer ongoing training and development opportunities for Board members to keep their skills and knowledge up to date.
  • Seek Diverse Perspectives: Ensure that the Board includes members with diverse backgrounds and perspectives to enhance decision-making and governance.

With so many current and emerging risks in Super, an effective approach towards managing these risks and ensuring compliance with regulations will provide Super trustees with a firm foundation for making the right decisions, achieving strategic goals and meeting the expectations of internal and external stakeholders.

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