The government and the superannuation industry must act faster to stem the nearly $2 billion annually being spent on duplicate life insurance policies warns a draft Productivity Commission report examining efficiency of the $2.6 trillion retirement savings system.

Modelling in the report released on Tuesday has revealed the depth of balance erosion from our mainly opt-out system, with so-called disadvantaged fund members earning a starting salary of $36,000 being among the hardest hit.