Your KiwiSaver fund is a Portfolio Investment Entity (PIE) — which means it is taxed using a special rate called the Prescribed Investor Rate (PIR), not your normal income tax rate. Getting your PIR right determines how much tax your KiwiSaver fund pays on investment returns each year.
Your PIR is the tax rate applied to your KiwiSaver earnings. PIR options: 10.5%, 17.5%, or 28%. The maximum PIR is 28% — even if you normally pay 33% or 39% income tax. This is a significant tax saving for high earners. Your PIR is based on your taxable income from the two prior years. If you set too low a PIR, IRD will bill you the difference at year end. If too high, you cannot get a refund. Set your PIR correctly — use 28% if your income exceeds $48,000.
What Is the PIR?
The Prescribed Investor Rate (PIR) is a capped tax rate for income earned inside PIE investment funds, including:
- KiwiSaver funds
- Managed funds on InvestNow, Kernel, Simplicity, etc.
- PIE-structured ETFs
The PIR replaces your personal income tax rate for PIE income. Crucially, the maximum PIR is 28% — which means higher-income investors pay less tax on KiwiSaver and PIE returns than they would on equivalent non-PIE investments.
PIR Rates and Eligibility
| PIR | Applicable if your income for either of the 2 prior years was… |
|---|---|
| 10.5% | Under $14,000 both years (and total income including PIE income under $48,000) |
| 17.5% | Under $48,000 both years (and total income including PIE income under $70,000) |
| 28% | All other situations (income over $48,000 in either prior year) |
Use 28% if:
- Your income exceeded $48,000 in either of the last two years
- You are unsure of your rate
- Your income is variable and may have exceeded $48,000
Why the PIR Matters for High Earners
The PIR advantage is most significant for people paying 33% or 39% personal income tax:
| Personal tax rate | PIR on KiwiSaver | Tax saving per year |
|---|---|---|
| 33% (income $70k–$180k) | 28% | 5 percentage points on KiwiSaver returns |
| 39% (income over $180k) | 28% | 11 percentage points on KiwiSaver returns |
Example: KiwiSaver fund earns 8% on a $200,000 balance = $16,000 return.
- At 33% personal rate: $5,280 tax
- At 28% PIR: $4,480 tax
- Annual saving: $800 — just from the PIR cap
Over decades of compounding, this saving is substantial.
Consequences of the Wrong PIR
PIR Set Too Low
If you use a PIR lower than you are entitled to (e.g., 10.5% when you should use 17.5%):
- Your fund pays less tax during the year
- At year end, IRD reconciles and bills you the difference
- The additional tax appears in your automatic assessment as a liability
PIR Set Too High
If you use a PIR higher than you should (e.g., 28% when 17.5% is correct):
- Your fund pays more tax than required
- You cannot get a refund of excess PIE tax — unlike PAYE overpayments
- The overpayment is lost
This asymmetry means it is generally better to use 28% when uncertain — you won’t overpay significantly at 28% (it is still below the 33%/39% personal rates), but underpaying leads to an unexpected bill.
How to Set or Update Your PIR
With Your KiwiSaver Provider
- Log in to your KiwiSaver provider’s website or app (ANZ, ASB, Simplicity, Kernel, etc.)
- Go to account settings or tax settings
- Update your PIR to the correct rate
- Confirm with your IRD number
Each provider stores your PIR separately. If you have multiple PIE funds (e.g., KiwiSaver + managed funds on InvestNow), update your PIR with each provider.
Annual Review
Review your PIR each year after filing your tax return — your income may have changed, moving you between brackets. Update with your provider if needed.
PIR for New Migrants and First-Year Workers
If you are new to NZ and have no prior-year NZ income history:
- Use 10.5% or 17.5% in your first year if you expect income under $48,000
- Use 28% if you expect income over $48,000
No prior two years means you estimate based on expected current year income.
Frequently Asked Questions
Does the PIR apply to my contributions or my returns?
The PIR applies to the investment returns earned inside your KiwiSaver fund — not to your contributions. Your contributions (3%–10% of salary) come from after-tax income and are not taxed again when invested.
My KiwiSaver provider is calculating tax at 28% but I only earn $30,000. What do I do?
Update your PIR to 17.5% through your provider’s online portal. Going forward, the fund taxes earnings at 17.5%. Prior-year taxes already paid at 28% cannot be refunded.
I switched KiwiSaver providers last year. Is my PIR carried over?
No — your PIR does not automatically transfer. Set your PIR with your new provider when you join.
Is the PIR the same for all managed funds?
Not all managed funds are PIEs. Some managed funds are not PIE-structured and use standard income tax rules. Check with your provider — if the fund is a PIE, PIR applies; if not, your marginal rate applies.