The Federal Government has slashed the amount wealthy Australians can contribute to their superannuation accounts at discounted tax rates.
Under present rules, those aged under 50 can salary sacrifice $50,000 a year, and those over 50 up to $100,000 a year, and pay just 15 per cent tax on it.
But under changes announced in tonight's Federal Budget, the salary sacrifice thresholds have been cut back to $25,000 and $50,000.
Budget 2009: summary The new limits will apply from July 1, meaning this year's contributions will not be affected
The clamp down on tax breaks will save $2.7 billion over four years.
The Government also cut the level of co-contributions provided to low- and middle-income earners.
In what it describes as a "temporary" measure, the Government will reduce its matching of super contributions by workers earning less than $60,342 from $1.50 for every dollar invested to $1 for the next three years.
It will pay a $1.25 co-contribution for a further two years before the full co-contribution comes back in 2014.
This means workers earning less than $30,342 who contribute $1000 from their after-tax income will see their co-contribution cut from a maximum $1500 this year to $1000 for the next three years.
The co-contribution is means tested, and the maximum payment is reduced for each dollar you earn above $30,342. You lose your entitlement to any co-contribution once your income exceeds $60,342.
Treasurer Wayne Swan said the cuts were part of "major structural savings to support the long term sustainability of our pension system and the budget more broadly".
The move comes against a backdrop of one of the toughest markets for the superannuation industry and discretionary funds flows.
Funds under management have been down by between 15 per cent to 20 per cent over the past year, mostly because of the heavy losses in equities.
For full coverage and analysis see Wednesday's Mercury. 
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