Industry and retail funds will pay a special levy to fund the $47 million shortfall in the Compensation Scheme of Last Resort following the collapse of Shield Master Fund and First Guardian.
About 12,000 Australians lost up to $1.2 billion in retirement savings after being lured to the funds, often by third parties, with promises of higher returns.
Australia's superannuation sector is worth an estimated $4.3 trillion.
"The alleged practices employed in the cases of the Shield and First Guardian Master Funds have highlighted the need for reform," financial services minister Daniel Mulino said.
"Those include high-pressure lead generation pushing people to switch their retirement savings into higher risk environments and products such as low-quality managed investment schemes."
Financial advisors, credit providers, responsible entities and superannuation trustees will also contribute to the levy.
Mr Mulino will host a roundtable on Wednesday to discuss the levy and other options for post-implementation reform.
The government will also consider reforming professional indemnity insurance and financial firms' misuse of insolvency practices to dodge rulings by the Australian Financial Complaints Authority.
The reforms would also support the government's productivity agenda, Mr Mulino said.
"Defective schemes attract funds that should otherwise support innovation and economic growth," he said.
"And when financial schemes collapse, investor confidence diminishes alongside."
The special levy defies calls from unions and the superannuation sector, which said the move handed the bill to ordinary Australians.
"Forcing 18 million Aussies who are super fund members to fund the CSLR will set a dangerous precedent," Association of Superannuation Funds of Australia CEO Mary Delahunty said.
"It risks treating retirement savings as a convenient pot of money for solving problems, rather than keeping super focused on providing a dignified post-working life for Australia's retirees.
The industry already had its own compensation mechanism, paid for by super fund members under the Superannuation Industry (Supervision) Act, Ms Delahunty said.
"It is like being forced to pay for home insurance not only for your own house, but also for someone else's house in another town," she said.
Consumer advocacy group Super Consumers Australia threw its weight behind the reforms.
"The reforms outlined today are vital to restoring people's trust in the financial services sector, particularly for those who left out of pocket through no fault of their own," chief executive Xavier O'Halloran said.
