KiwiSaver Tax: PIR, PIE, FIF, and Withdrawals
KiwiSaver schemes are Portfolio Investment Entities (PIEs). Investment income is taxed at your Prescribed Investor Rate (PIR) — 10.5%, 17.5%, or 28% — and the provider pays the tax on your behalf. Foreign Investment Fund (FIF) rules apply at the scheme level, not to members. Most lump-sum withdrawals are not taxable. Since the 2020 PIE rules, IRD automatically squares up any PIR mismatch at year end.
General Information Only: This page provides factual data for comparison purposes and does not constitute financial advice. Individual circumstances vary.Read our disclosure
PIR Rates: 10.5%, 17.5%, 28%
Your PIR is set by your taxable income plus PIE income in either of the two income years before the current one — IRD uses the lower of the two for the test.
| PIR | Taxable income (lower of past 2 years) | Taxable + PIE income (combined) |
|---|---|---|
| 10.5% | NZ$15,600 or less | NZ$53,500 or less |
| 17.5% | NZ$15,601–NZ$53,500 | NZ$53,501–NZ$78,100 |
| 28% | Over NZ$53,500 | Over NZ$78,100 |
Source: IRD — Find my prescribed investor rate. Verify directly with IRD before changing your PIR.
How PIE Tax Works
KiwiSaver schemes are taxed under the Portfolio Investment Entity (PIE) regime. The provider calculates investment income at the fund level, attributes a share to each member based on units held, and pays tax to IRD at the member's PIR.
For most members the practical effect is:
- Investment income inside the scheme is not shown in your IR3 / personal tax return.
- Your provider settles the PIE tax — you see the net effect in your unit price and balance.
- The 28% PIR is capped: you never pay more than 28% on PIE income, even if your marginal income tax rate is 33% or 39%.
The IRD Square-Up (since 2020)
Before April 2020, an under-stated PIR was final — you kept the saving. That changed. IRD now performs an annual square-up:
- If your PIR was too low, IRD issues a tax bill for the shortfall (taxed as ordinary income at your marginal rate).
- If your PIR was too high, IRD refunds the overpayment.
- The square-up is automatic — no IR3 required for most members.
Keep your PIR current, especially after a salary change, redundancy, return from overseas, or starting a new contracting income.
FIF Rules: Fund-Level, Not Member-Level
The Foreign Investment Fund (FIF) regime taxes New Zealand investors on certain offshore equity holdings — most commonly using the Fair Dividend Rate (FDR) method at 5% of opening market value per year.
Inside a KiwiSaver scheme, FIF calculations are handled by the provider as part of the scheme's PIE return. You don't file FIF separately for your KiwiSaver holdings. The tax is already reflected in your unit price.
Direct overseas share investments outside KiwiSaver (e.g. via Sharesies, Hatch, Tiger Brokers) can trigger personal FIF obligations once your offshore portfolio cost exceeds NZ$50,000 — that is a separate topic. See IRD — FIF rules for individuals.
Withdrawal Tax Treatment
Lump-sum withdrawals are generally not taxable, because the underlying investment income has already been taxed inside the PIE. This applies to:
- Age-65 (or 5 years from joining, whichever is later) withdrawals.
- First-home withdrawals (see our first-home guide).
- Significant financial hardship withdrawals.
- Serious illness, life-shortening congenital condition, or permanent emigration withdrawals.
- Withdrawal on death (paid to the estate).
Some downstream uses of withdrawn funds may have tax consequences (e.g. property income, gifting, overseas remittance). Get personal advice before structuring large withdrawals.
Government and Employer Contributions
Government contribution
Up to NZ$521.43 per year, paid net. Not taxable to you. Requires NZ$1,042.86 of member contributions in the contribution year (1 July to 30 June). Eligibility: 18 to 65, mainly resident in NZ.
Employer contribution
Minimum 3% of gross salary. Taxed via ESCT (Employer Superannuation Contribution Tax) at a rate set by your annual salary + employer super: 10.5% to 39%. Your employer deducts ESCT before crediting your account.
Frequently Asked Questions
What is my PIR rate?+
Your Prescribed Investor Rate (PIR) is the tax rate applied to investment income inside a Portfolio Investment Entity (PIE). It is 10.5%, 17.5%, or 28%, set by your taxable income and PIE income in the lower of the previous two income years. IRD publishes a calculator at ird.govt.nz/roles/portfolio-investment-entities/find-my-prescribed-investor-rate.
What happens if my PIR is wrong?+
Since the 2020 PIE tax rule changes, IRD performs an automatic square-up at the end of each tax year. If your PIR was too low you receive a tax bill for the shortfall; if it was too high the overpayment is refunded. Confirm your PIR with your provider when your income changes.
Do I include KiwiSaver returns in my tax return?+
No. PIE tax on KiwiSaver scheme income is paid by the provider on your behalf at your PIR. You do not include it as taxable income in your IR3, but IRD uses your provider's PIE reporting in its annual square-up.
Are KiwiSaver withdrawals taxed?+
Lump-sum withdrawals from KiwiSaver — first-home, hardship, age-65, life-shortening congenital condition, serious illness, or permanent emigration — are generally not taxed. Investment income inside the scheme has already been taxed at your PIR.
Does FIF tax apply to me as a KiwiSaver member?+
No. The Foreign Investment Fund (FIF) regime applies at the fund level, not to individual members. Your provider handles FIF calculations on the scheme's offshore equity holdings as part of its PIE return; you only see the net result in your unit price.
Are the government and employer contributions taxed?+
The annual Government contribution (up to NZ$521.43) is paid net and is not taxable to you. Employer contributions are subject to Employer Superannuation Contribution Tax (ESCT), which is deducted by your employer before the contribution lands in your account.
What if I move overseas?+
You can stay in KiwiSaver while overseas. PIR still applies to PIE income while you are a New Zealand tax resident. Once you become a non-resident for tax purposes, the rules change — see IRD's guidance on KiwiSaver and overseas, and consult a tax adviser before making decisions.
Related Reading
Important Information
Disclaimer: This page provides general information only and does not constitute financial advice under the Financial Markets Conduct Act 2013. FundCompare.co.nz is not a licensed Financial Advice Provider (FAP).
We do not assess suitability, make recommendations, or provide personalised advice. The information shown is sourced from publicly available data and may not reflect current offerings. Past performance is not a reliable indicator of future returns. Investment returns can be negative, and you may receive back less than you invested.
Before making any decisions: Always verify current information directly with the relevant KiwiSaver provider and read their Product Disclosure Statement (PDS).
Need personalised advice? Consult a licensed Financial Advice Provider. Find advisers at fma.govt.nz