Govt flags super life insurance opt-out

Working Australians will soon be able to opt out of the life insurance component of their superannuation fund.

Flagging a suite of changes, Financial Services Minister Kelly O'Dwyer said super savings were being eroded because of default arrangements such as insurance.

"Right now it is very difficult for people to opt out of insurance," she told Sky News on Monday.

"It can be a very big problem, particularly for young Australians who might have more than one fund as a result of having part-time work and being forced into multiple fund arrangements."

The federal government is also giving the Australian Prudential Regulation Authority new intervention powers while requiring more transparency by funds and applying criminal penalties when they do the wrong thing.

The super industry, valued at $2 trillion, needed integrity in the system, Ms O'Dwyer said.

"It needs to be managed properly and simply can't rely upon on old foundations and structures that were set up 25 years ago," she said.