The compensation will return 100 cents in the dollar to more than 5000 investors, many of them retirees who lost life savings.

The move was portrayed by the assistant treasurer, Bill Shorten, as vital to bolster confidence in the superannuation system.

There would always be ''crooks and thieves and charlatans'', he said. ''What we do know is the regulators seem to be catching some of the people who have done it; and we will compensate victims who are victims through no fault of their own.''

The compensation marks the end of a tortuous path for some Trio investors after regulators took over Trio Capital in December 2009 and froze more than $400 million in investments.

It lifts the payout from 90 per cent when superannuation investors in Commercial Nominees were compensated for losses of $30 million in 2002.

But yesterday's measure is limited to 5385 investors in government-regulated superannuation funds, including more than 2500 in NSW. The distinction means that do-it-yourself superannuation investors, among those who lost another $120 million in two Trio hedge funds, will not be paid.

These investors include John Telford, 62, a Wollongong man diagnosed as an incomplete quadriplegic who lost his disability payout of $600,000.

Mr Telford is among more than 100 clients of a collapsed Wollongong financial planner, Tarrants, who will not receive a cent because they invested in DIY super funds.

''It's a hit below the belt considering that nobody pointed out that there was such a thing as two super funds: one with a guarantee and one with nothing,'' Mr Telford said yesterday.

Rosemary Walker, 73, and 250 other low-paid Tabcorp workers who had savings tied up in the Astarra Superannuation Plan will now get their money back.

Ms Walker said the uncertainty had taken its toll on her colleagues' health.

''It's been a very arduous, traumatic and highly stressful time.''

About $170 million in Trio's losses were in two hedge funds, Astarra Strategic and ARP Growth.

Mr Shorten said: ''Money was directed into hedge funds in the Caribbean; there is little evidence investments were made or, if they were, if they have any value.''

The former investment manager for Trio Capital, Shawn Richard, has pleaded guilty to two counts of dishonest conduct in relation to Astarra Strategic and faces sentencing on May 13.

Mr Shorten said no compensation was available for non-superannuation investors who placed their money directly into troubled funds. He also said investors in DIY super funds were ineligible for compensation because they were taking responsibility for their own investments.

Asked whether DIY super investors, who account for a third of the $1.3 trillion in Australian superannuation savings, were aware of their lack of a safety net, Mr Shorten said: ''I would say they are going to become a lot more aware.''

He said a report on extending a fraud compensation scheme to all investors was due by June 30.