Understanding your PIR – the tax rate on your KiwiSaver returns

KiwiSaver funds are a type of investment called a portfolio investment entity (PIE), and PIEs don’t tax everyone the same. Instead, the tax on your share of the fund’s investment returns is charged at your own prescribed investor rate (PIR) – a rate you tell your provider. Get it right and you pay exactly what you should; get it wrong and you’re either overpaying tax on decades of returns or building up a bill.

The current rates

There are three PIRs for individuals: 10.5%, 17.5% and 28%. Which one applies depends on your income over the last two tax years (a tax year runs 1 April to 31 March). For each of those years, work out your rate using both tests below – then your PIR is the lower rate from the two years.

Based on the thresholds that took effect on 1 April 2025:

• 10.5% – taxable income of $15,600 or less, and taxable income plus PIE income of $53,500 or less.
• 17.5% – taxable income of $53,500 or less, and taxable income plus PIE income of $78,100 or less.
• 28% – everyone above those limits. This is also the default if you never provide a rate, and it’s the maximum – PIE tax never goes above 28%, even if your income tax rate is higher.

Thresholds are set by the Government and can change – confirm the current figures at ird.govt.nz if you’re near a boundary.

Why the wrong PIR costs you money

• Too high (for example, staying on the 28% default when you qualify for 17.5%): you pay more tax than the law asks, year after year, on returns that would otherwise be compounding for you. Inland Revenue now reviews PIRs and can refund recent overpaid PIE tax – but it’s far better not to overpay in the first place.
• Too low: Inland Revenue will square it up after the end of the tax year, so an artificially low rate isn’t a saving – it’s just a deferred bill.

A quick example of the stakes: at 28% instead of 17.5%, more than a tenth of every dollar your fund earns goes to tax that didn’t need to be paid. Over a working lifetime of compounding, that’s real money.

When your PIR commonly changes

Your income moving across a threshold is the trigger, and it happens more often than people expect:

• Dropping to part-time work, taking parental leave, or a period out of work.
• A student or young person starting their first full-time job (rate goes up).
• Retiring – lower income in your first retired years often means a lower PIR.
• One unusually good year (a redundancy payout, big overtime) – remember the two-year, lower-rate rule can keep you on the lower PIR.

A good habit: check your PIR whenever your income changes meaningfully, and once a year regardless – it takes two minutes in your provider’s app or portal.

PIE tax is quietly a KiwiSaver advantage

For higher earners, the 28% PIR cap means KiwiSaver returns are taxed at most at 28%, even if your income tax rate is 33% or 39%. That’s one of the reasons KiwiSaver is such an efficient long-term savings vehicle – the tax treatment inside the fund is as good as or better than holding the same investments directly.

Where to check and update yours

Your PIR is in your KiwiSaver provider’s app or online portal, and on your annual statement. Update it there directly, or through myIR. If you’re not sure which rate applies – or your income has moved around over the last two years – get in touch and we’ll work it out with you as part of a KiwiSaver review. Our fact find estimates your PIR from the income you give us, and we confirm it before anything is set.