Treasurer Josh Frydenberg is backing a legislated increase in superannuation for millions of workers in the wake of a government paper that canvasses options to reform retirement savings and pensions.

Mr Frydenberg stood by the plan to increase the super guarantee levy from 9.5 per cent to 12 per cent despite pressure from Liberal backbenchers who believe employers should not be forced to pay the higher rate.

Treasurer Josh Frydenberg is backing a legislated increase in superannuation for millions of workers. Credit:Alex Ellinghausen

The Treasurer also took aim at Westpac over almost 23 million alleged breaches of money-laundering controls, declaring it would face action from the prudential regulator under powers that could lead to fines against the company and the disqualification of directors.

The dispute over super appears likely to grow after the release of the government discussion paper on Friday that seeks community views on changes to the $2.9 trillion super system, but Mr Frydenberg shut down the idea of delaying the super increase.