The new $1.6 million limit on retirement pension accounts is attracting publicity but affects few people. Other changes are much more important to most. There is a new lower limit on concessional or tax deductible super contributions.

Tax deductible contributions include super guarantee amounts employers pay for staff, and amounts workers contribute by salary sacrifice. The limit has been cut from $30,000 for those under age 50 and $35,000 for those older, to $25,000 for everyone.

Many medium and higher earners sacrifice salary up to the limits allowed, particularly older workers without mortgages or dependent children. They will need to make changes.

People who are currently sacrificing salary close to the old limits must now contact their pay office and reduce their salary sacrifice amounts to stay within the lower limit. The penalties for exceeding the contribution limit can be severe, including tax at the top marginal rate of 49 per cent.

There will be a new 15 per cent tax on the earnings of pre-retirement pensions. People using these and transition-to-retirement strategies should review their situation to see if they can avoid the new tax. Some will be able to if they talk to their advisers.

On the positive side anyone under age 65 and those up to age 75 and still working can now put money in super and claim a tax deduction for the amount at any time. They need to stay within the $25,000 limit of course.

Previously only self-employed people and those whose employee income was less than 10 per cent of their total income, could claim deductions for contributions.

This will provide a valuable opportunity for anyone with savings to top up their super at any time and receive a tax deduction for doing so.

Another valuable new opportunity involves the spouse super contribution scheme. People with a low income spouse can reduce their tax bill by up to $540 each year by putting $3,000 into their spouse’s super account.

The big change is in the spouse’s allowable income. Previously it had to be below $10,800 per annum. From now on the spouse can earn up to $37,000. This is far more realistic and will be useful to many more people.

The new $1.6 million limit applies to retirement pension accounts. Congratulations to people affected by this rule.

You need to speak to your advisers urgently and arrange to transfer any excess amount to an accumulation account liable to 15 per cent tax on earnings.