Another proposal is to strengthen the annual assessment of MySuper product outcomes to ensure that the investment and insurance strategies, fees, scale and returns are promoting the financial interests of MySuper members.

The proposed reforms also give APRA more capacity to take preventive and corrective action if it has prudential concerns about a fund or if a fund is not acting in the best interests of members, and greater capacity to refuse or cancel a MySuper authorisation where it believes a licensee will fail to meet its obligations.

The reform package also includes measures that if passed, would mean that directors of superannuation funds who breach their duties to members are subject to the same civil and criminal penalties as directors of ordinary managed investment schemes.

Minister for Revenue and Financial Services Kelly O’Dwyer said the Turnbull government has also “tasked APRA with making it easier for consumers to opt-out of automatic life and disability insurance policies provided through superannuation”.

“The package does not make any changes to the taxation treatment of people’s superannuation,” said Ms O’Dwyer.

Many of the measures in this package, she said, have been recommended by past reviews into superannuation, commissioned by both Coalition and Labor governments.

The proposed reforms have been welcomed by the Financial Services Council that said these reforms would result in a more “transparent, competitive and accountable” superannuation system.

FSC chief executive Sally Loane said a more transparent superannuation system will “enable the prudential regulator, APRA, to take action over underperformance of subscale funds”. 

“The FSC urges the government to ensure these reforms are accompanied by legislation to enable consumers to be able to choose the fund they want, and which would also allow competition into the default market,” said Ms Loane.