Superannuation is a low-tax way of saving for retirement.

Which explains why successive treasurers have continually tinkered with the rules, trying to encourage retirement savings without giving up too much tax revenue, giving unnecessary handouts to high income earners and blowing a hole in the budget in the process.

The latest changes are another attempt to maintain the right balance.

There are three ways you can contribute to super.

One is to make your own contributions from your after-tax income.

The other two are made before income tax: your employer can make contributions or you can make your own salary-sacrifice contributions.

Employer contributions are equal to nine per cent of your pay, not counting overtime, and are compulsory.

Under current government policy they are set to rise in quarter per cent steps to reach 12 per cent in 2019.

By the end of last year, the total amount of money invested in super funds was $1.51 trillion, with nearly a third of that in small self-managed or do-it-yourself funds.

Both compulsory employer contributions and personal pre-tax contributions avoid income tax but are hit with a 15 per cent contributions tax as they are made.

And there are limits on how much of these so-called concessional contributions can be made.

After-tax personal contributions aren’t taxed as they go into the funds.

For some low-income earners the government may also tip in a co-contribution, but for high-fliers there is a limit of $150,000 a year.

The earnings of the money invested in super are also taxed, mostly at a 15 per cent rate.

So how do you get hold of your nest-egg?

You have to wait until your “preservation age”, from 55 to 60, depending on when you were born.

You can take it as a lump sum, which generally attracts little or no tax, depending on your age, the amount of the lump sum and the type of contributions originally made.

Or you can take it bit by bit as a “complying income stream”, although there are lower limits to the size of the payments depending on your age and the size of the fund.

The measures announced by Treasurer Wayne Swan on Friday included two key changes.

One was an increase in the amount of concessional pre-tax contributions that can be made.

The limit will rise from $25,000 to $35,000 a year for anyone over 60 and, from July next year, to people aged over 50 as well.

The other was the tax treatment of funds from which a pension, or “complying income stream”, are being taken.

For any fund producing an income stream, no matter how big or small, any earnings of the fund over $100,000 a year are now taxed at the 15 per cent rate that applies to any fund earnings.

Before the changes, those earnings would have been tax-free.