MELBOURNE, Australia — HESTA, one of Australia's largest industry superannuation funds serving health and community sector workers, is navigating leadership upheaval with the announcement that its third C-suite executive in under 12 months is departing, even as the $100 billion-plus fund delivered solid investment gains for members in 2025 and advocates for major retirement system reforms.

HESTA Super Fund
HESTA Super Fund

Chief Operating Officer Stephen Reilly will step down, joining a wave of senior exits that includes CEO Debby Blakey, who plans to retire in the second half of 2026 after years at the helm. The departures come as HESTA celebrates surpassing $100 billion in funds under management and reports strong member returns, but also grapples with lingering effects from a 2025 administration transition that drew regulatory scrutiny from the Australian Prudential Regulation Authority (APRA).

HESTA's Balanced Growth option, the default MySuper strategy where most members are invested, returned 9.42% for the 12 months to Dec. 31, 2025, outperforming the industry average of around 9.1%. Over the full 2025 calendar year, members saw more than $10 billion added to their retirement savings through contributions and investment performance. The option has averaged 8.02% annually over the past decade, with consistent outperformance in shorter periods.

Other options also posted gains. The High Growth choice returned 11.39%, while Indexed Balanced Growth delivered 10.5% or higher in some metrics. Retirement Income Stream members benefited similarly, with Balanced Growth in that category achieving 11.25% for the year. HESTA emphasized that all ready-made options exceeded their long-term 10-year objectives to the end of 2025.

The fund hit a milestone in late 2025 when member savings crossed $100 billion, delivering scale benefits that support lower fees and stronger negotiating power for investments. HESTA has repeatedly won recognition, including the SuperRatings Net Benefit award for 2026, highlighting strong outcomes after fees and taxes over short and long terms.

Yet the leadership changes raise questions about continuity. Blakey, who has led the fund through significant growth, has spoken about the need for bold reforms and global resilience in superannuation amid geopolitical tensions, including the ongoing Iran conflict. In recent speeches, she warned boards of catastrophic risks from failing to prepare for volatility.

Reilly's exit marks the third high-level departure in a year, following others in the executive team. HESTA has not detailed reasons for the changes beyond standard transitions, but the timing coincides with efforts to stabilize operations after the APRA action.

In December 2025, APRA imposed additional license conditions on HESTA following a "severe, prolonged disruption" during its switch to a new administration provider. The move left more than 1.1 million members unable to access accounts online for weeks, with call center delays compounding frustration. APRA cited deficiencies in risk management and board governance, requiring independent reviews of those frameworks.

HESTA apologized to affected members and has worked to resolve issues. Officials stressed that core functions like contributions and payments continued, but the incident highlighted challenges in large-scale technology upgrades common across the super sector.

On the policy front, HESTA has been vocal in 2026. In its pre-budget submission for 2026-27, the fund urged reforms to encourage more Australians to shift super into retirement income streams, where earnings are tax-free. Research commissioned by HESTA showed that up to 1.8 million retirees missed out on an estimated $2.46 billion in extra earnings in the 2025 financial year by staying in accumulation phase. Without changes, that could exceed $5 billion annually by 2030.

The fund is calling for a default mechanism allowing super funds to automatically transition eligible members into retirement income products, with an opt-out safeguard. It also welcomed the passage of legislation increasing the Low Income Super Tax Offset (LISTO) and other measures aimed at fairness in the system.

HESTA has seen record downsizer contributions, topping $94 million in 2025 — an 8% rise from 2024 and 45% from 2023 — driven by strong property sales. The fund supports "payday super" reforms set to begin July 1, 2026, which would require more frequent employer contributions to reduce volatility from lump-sum payments.

Investment strategy remains focused on diversification. HESTA's February 2026 update highlighted how spreading risk across asset classes helped navigate market swings in 2025. The fund has increased exposure to areas like private credit and equities while maintaining caution amid global uncertainties, including Middle East tensions that could affect oil prices and inflation.

Performance data to late February 2026 shows Balanced Growth delivering solid year-to-date results, with longer-term returns remaining competitive. HESTA stresses that past performance is not indicative of future outcomes, and members should consider their own circumstances.

The fund, primarily for health and community services workers, manages savings for over one million members. Its not-for-profit structure aims to maximize returns for members rather than shareholders.

As leadership transitions unfold, the board will seek new executives to maintain momentum. Blakey's retirement marks the end of an era of expansion, during which HESTA grew significantly in size and influence.

Analysts note that while executive turnover can signal internal challenges, HESTA's strong returns and policy advocacy position it well in a competitive superannuation landscape undergoing consolidation and technological change.

Broader industry context includes rising super guarantee contributions, now at 12%, and ongoing debates about housing affordability, productivity and how super can support national goals. HESTA has called Australia a "centre of global capital" and pushed for reforms to address housing shortages that drag on economic growth.

Members are advised to check their accounts regularly, review investment choices and consider advice for retirement planning. HESTA provides tools and updates via its website and member portals.

Looking ahead, 2026 is expected to bring volatility from geopolitical risks and domestic policy shifts. HESTA's cautious outlook reflects awareness of potential market headwinds, yet its track record of resilience offers reassurance.

The fund continues to invest in sustainable options and member-focused initiatives, including lowering fees for some retirement income streams.

For many Australians, especially in frontline health roles, HESTA represents a critical pillar of financial security. Its ability to deliver competitive returns while advocating for systemic improvements will shape its reputation in the coming year.

As the search for new leadership intensifies and reform discussions advance in Canberra, HESTA's story underscores both the opportunities and challenges facing Australia's $3 trillion-plus super industry.

Members with questions about performance, the administration issues or retirement options should contact HESTA directly or consult a licensed financial adviser. The fund remains committed to transparency and putting members first amid a period of change.