Treasurer Josh Frydenberg has ruled out including the family home in an assets test for the aged pension, as he announced a sweeping review into the nation's retirement income system.

Key points: The superannuation guarantee rate is the amount of compulsory super that must be paid to employees

It is due to rise gradually from 9.5 per cent to 12 per cent by 2025

The Government's review follows a call by the Productivity Commission to conduct one before increasing the superannuation guarantee rate

The first major look at Australia's savings system in 30 years will examine the interaction between the age pension, compulsory super and voluntary savings.

"It will be very important in helping to determine future policy positions by creating a fact base of what is happening in the system, particularly as we have an ageing population, people are living longer and our superannuation pool is growing dramatically over time," Mr Frydenberg said.

However, he quickly clarified the Government would not consider including the family home in the pension assets test.

"Our position hasn't changed and that will never be part of our policy," he said.

The Productivity Commission last year urged the Government to undertake the review before increasing the superannuation guarantee rate.

The guarantee is the amount of compulsory super that must be paid to employees, and is due to rise gradually from 9.5 per cent to 12 per cent by 2025.

Some Coalition backbenchers, such as new Liberal MP Andrew Bragg, oppose the rise to 12 per cent — and will be looking at the inquiry to bring about change.

The Grattan Institute has also spoken out against lifting the rate to 12 per cent, arguing it would mean some people would be forced to save for a higher living standard in retirement than during their working lives.

However Mr Frydenberg said the superannuation guarantee increase remained Government policy.

Mr Frydenberg said including the family home in the assets test was not under review. ( AAP: Lukas Coch )

"Our position hasn't changed, it's legislated," he said.

"The Productivity Commission recommended we conducted a review, we're going ahead with the review.

"Our focus is putting more money into the pockets of retired Australians."

We don't want Liberal extremists getting their way: Labor

Shadow Treasurer Jim Chalmers expressed concern about the inquiry delaying the superannuation guarantee increase.

"We don't want to see the extremists on the Liberal Party backbench get their way," he said.

"Members of the Liberal Party in the Government have called for superannuation to be cut, they don't want to see the superannuation guarantee go to 12 per cent.

"The Government's obviously gearing up to cut superannuation by slowing the increase of the superannuation guarantee which was legislated, and which Australian workers need and deserve," he said.

Dr Chalmers also criticised the timing of the Government's announcement, which was made on Friday afternoon.

"If the Government was serious about this retirement income review they wouldn't have dropped it out on the eve of Grand Final weekend, hoping nobody would notice," he said.

"Labor will engage with the retirement income review as we see appropriate, and when we see fit."

