Is Your KiwiSaver Taxed at the Wrong PIR?

A prescribed investor rate, or PIR, is the rate your KiwiSaver scheme uses to tax the income it earns for you. It is one number, you supply it, and nothing forces you to revisit it. It is one of the easiest tax settings in New Zealand to get wrong, and one of the very few you can check yourself in about five minutes.

This page covers what the rate is, how to work out the correct one, and what actually happens if the one on your account is wrong. That last part is where a lot of what is written about PIRs is out of date, and it is out of date in both directions.

What a PIR is, and where it applies

Most KiwiSaver schemes are multi-rate portfolio investment entities, usually shortened to multi-rate PIEs. A PIE pays tax on your share of the fund’s income at the rate you have given it, rather than at the rate that applies to your salary. That rate is your PIR.

The same applies to most managed funds outside KiwiSaver. If you hold a KiwiSaver account and a separate managed fund, each provider holds its own copy of your PIR, and the two can disagree with each other without anything looking wrong in either place.

If you never give a provider a PIR, Inland Revenue uses a default rate of 28%. That is the highest rate, so someone who has simply never filled the field in is very likely paying more tax than they need to.

The three rates, and the two tests that decide yours

For a New Zealand tax resident there are three rates: 10.5%, 17.5% and 28%. Which one applies is decided by two figures, taken from either of the two income years before the current one:

• your taxable income for that year, and
• your taxable income plus your PIE income for that year.

Both tests have to pass before a rate applies. Read from Inland Revenue’s own PIR tool on 20 August 2026, they are:

• 10.5% if taxable income was $15,600 or less and taxable income plus PIE income was $53,500 or less.
• 17.5% if taxable income was $53,500 or less and taxable income plus PIE income was $78,100 or less.
• 28% if neither of those applies. This is also the rate used when no PIR has been given at all.

There is one further case. An individual holding a four-year temporary tax exemption, which is the exemption some new and returning migrants qualify for, can use a 0% PIR when investing in a zero-rate PIE.

Because the test looks back two years and either year can qualify you, a pay rise does not move your PIR straight away, and a year out of work can keep your rate low for two years afterwards. That lag is the most common way a rate that was correct quietly becomes wrong while nothing visible happens.

How to check yours in five minutes

1. Find your taxable income for each of the last two tax years. A New Zealand tax year runs 1 April to 31 March, and the figure sits on your income tax assessment in myIR.
2. Find your PIE income for each of those years. Your KiwiSaver provider issues an annual tax certificate showing it, and it also appears in myIR.
3. Apply both tests to each year separately, and take the lowest rate that either year allows.
4. Compare that with the rate your provider is actually using. It is in your KiwiSaver account, usually under tax details or account settings.
5. If the two differ, change it with the provider. It is a field you can update yourself and it takes a minute.

Do this for every fund you hold, not only KiwiSaver. Providers do not talk to each other, so a rate you corrected in one place can still be wrong in another.

What actually happens if it is wrong

Inland Revenue performs a PIE calculation as part of the annual income tax assessment for a New Zealand tax resident who has income from a multi-rate PIE. It works out the correct rate for the full year and compares the tax that was paid with the tax that should have been paid.

• If you paid too much, you get a PIE credit. It reduces any income tax you owe, and any credit left over is refunded to you.
• If you paid too little, you get a PIE debt, which is added to the income tax you owe for that year.

So the honest answer to “does the wrong PIR cost me money” is that it usually does not cost it permanently, because the assessment squares the difference up. Saying otherwise would be scaring you with something that is no longer true. What it does cost is real, and it is the part that rarely gets said:

• A bill you did not plan for. A rate that is too low produces a tax debt at the end of the year on money you have already counted as yours, held inside a fund you cannot draw on to pay it.
• Provisional tax. If your residual income tax including any PIE debt comes to more than $5,000, you have to pay provisional tax for the following year. A KiwiSaver tax setting can pull you into a payment regime you were not in before.
• The use of your own money. A rate that is too high hands the difference over for the rest of the tax year and until your assessment is issued, and you get it back without interest for the wait.
• Compounding. Inside a fund, tax deducted is tax that is no longer invested. The gap between 28% and 17.5% on one year’s return is small. Over the decades a KiwiSaver account is actually held for, it is not.

The KiwiSaver point that is often assumed backwards

PIE income from a locked-in fund is not counted as income for Working for Families or student loan repayment calculations, and Inland Revenue names a KiwiSaver scheme as an example of a locked-in fund. PIE income that is not from a locked-in fund does count and has to be included.

This is worth knowing because the assumption usually runs the other way, and it runs in the expensive direction: someone leaves a KiwiSaver tax setting alone because they think correcting it will reduce their Working for Families entitlement. For a KiwiSaver scheme, it does not.

Why this one is worth the ten minutes

Most money decisions are judgement calls that sensible people disagree about. This is not one of them. There is a correct answer, it is settled by two numbers you already have, and the whole task is looking it up and typing it in.

It is also a reasonable test of everything else. If your PIR has been wrong for three years and nobody has mentioned it, that says something about how the rest of your position is being looked after.

Where these figures come from

Every rate and threshold on this page was read from Inland Revenue on 20 August 2026 and from nowhere else:

• The rates, the thresholds and the default rate: Inland Revenue, Find your prescribed investor rate (PIR).
• The end-of-year calculation, PIE credits and PIE debts, the provisional tax threshold and the locked-in fund treatment: Inland Revenue, End-of-year PIE calculation and income tax assessments.

Thresholds are set in legislation and can change. Inland Revenue’s own tool is the authority for the tax year you are in, and it is the first place to look if you are reading this well after the date above.

Related

• What does a financial adviser cost in New Zealand?
• What independent and no-commission actually mean
• Work out the gap between what you have and what you could have
• Book a free first consultation

VIS.finance™ is a licensed Financial Advice Provider (FSP1010421). This page is general information, not personalised financial advice. Your own PIR depends on your own income, and if you are unsure of it, check with Inland Revenue or your scheme provider.

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