The government is also slowing the timetable for increased compulsory employer contributions.
Labor had planned to reach 12 per cent by 2021-22. That's now being put back a year.
The current contribution rate is 9.25 per cent.
Finance Minister Mathias Cormann says excess superannuation contributions invariably were inadvertent and a punitive tax penalty was hitting people doing the right thing in saving more to fund their retirement, rather than relying on the age pension.
Excess non-concessional (after-tax) contributions were taxed at the top marginal tax rate.
Given non-concessional superannuation contributions come from income that had been previously been taxed, the overall tax rate could be up to a "staggering" 93 per cent, Senator Cormann said.
For any excess contributions made after July 1, 2013, the government will now allow individuals to withdraw the excess and any earnings from the fund.
Those who leave the money there will still face punitive tax penalties.
Senator Cormann said the change to the superannuation guarantee timetable was necessary because Labor and the Greens had refused to pass legislation implementing the government's election promise to defer the 0.25 per cent increase scheduled for July 1.
Rescheduling would make it clear to business just what rate they had to pay, he said.
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