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PIR is one of those tiny settings that can quietly shape your after-tax returns for years, and most people only notice it as three letters on a KiwiSaver statement. We bring Dave in for a plain-English Tax Chat to explain what PIR (prescribed investor rate) actually is, how it works inside PIE funds and unit trusts, and why it’s different from your normal income tax rate.
We unpack the part that surprises most listeners: for many KiwiSaver and PIE investments, the top PIR is capped at 28%, even if your personal tax rate is 33% or 39%. That can make KiwiSaver tax more efficient for some people using it as a retirement savings vehicle. We also talk through the real-world risk: if your circumstances change and your PIR doesn’t, you can end up paying the wrong amount. Overpaying can be especially painful because you may not be able to claim it back, while underpaying can still lead to a bill later.
You’ll get the key PIR bands (10.5%, 17.5%, 28%) and a practical checklist for staying up to date, including where to find your PIR in your provider’s app or portal and how MyIR can help if it’s not clear. If you’ve ever changed jobs, had time off to look after kids, reduced hours, or simply set your KiwiSaver up years ago and never looked again, this is the nudge to check.
Subscribe for more straight-talking money chats, share this with someone who has KiwiSaver, and leave a review if it helped, then go check your PIR today and tell us what you found.
A lot of you have been asking me what is PIR when it comes to investments. I've got Dave in the house today. He's going to explain to us what is PIR. Hello, Dave.
SPEAKER_00
Hi there. And exciting stuff. Tax Tax Chat, shall we call it?
So PIR is what we call a prescribed investor rate. So how investments work, some investments, there are what we call a pie fund or a unit trust, and they will pay the tax at the investor's rate, but they will pay the tax for them. So the prescribed investor rate, let's let's go down the KiwiSaver path, is probably the best way to explain it. You have a KiwiSaver, you pay if you're certain levels of what you earn, you will pay a specific investor rate. However, that rate
Aha. That's where I was going to stop you for a moment. I'm like, okay, so people are paying 30% on their income.
SPEAKER_00
Yeah.
SPEAKER_01
That is not the PIR rate.
SPEAKER_00
No, correct. So it is for the two lower ends. So the 33, uh not the 33, sorry, the 15, is it in 23? So yeah, don't um shoot me if I'm wrong. But but basically what happens is that the top rate that you can pay your tax when you're in an investment like that is 28%. And that is capped. So you don't have to go into your accountant and ask them to claim it back. You don't underpay. You don't you that nothing goes through your tax return as such because it's all paid by the unit trust. So everything's done, paid, and then they pay it within the fund itself, and then it's done and you get the return. Couple of things to look out for here. Number one is make sure you've got it right.
SPEAKER_01
Because I was about to say, who prescribes it?
SPEAKER_00
Make sure you've got it right. So it's prescribed by the government, and then we just have
to adhere to it. But I would make sure that you're running with the right rate. So if you've had a change in circumstance with your roles or your jobs, and you've dropped your maybe you've dropped your salary a little bit, if you overpay your prescript prescribed investor rate, you cannot claim that back. Oh but they will come and take it if you underpay.
SPEAKER_01
That's unfair.
SPEAKER_00
Yeah, exactly. So so the key is to get that right. So have a look. Um most
you could search it, you could search PIR, and that will tell you what the rates are and what the limits are for each. Make sure you get that right because A, if you're an investment, you're in KiwiSaver, you're capped at 28%, which is great. So if you're using it as an investment, if you're using it as a retirement vehicle, that's capped at 28. So you won't be paying 33%. If you're a 33% taxpayer or a 39% taxpayer, you won't be paying that if you're in an investment which follows the same rules. You'll just pay the top rate of 28%, and they won't, they won't take any, they won't be asking you to go up to your investment. Normal. Yeah. So so it's a good way, a, if you're already into retirement and you're using Kiwi Saver as a vehicle, great, because it means you're paying less tax. If you're using a type of this type of investment to help you get along or or put some money into outside of maybe a term deposit that doesn't apply, then now you'll be paying tax at 33 and not 28 or 39.
SPEAKER_01
So I've got some numbers for people. Here we go.
SPEAKER_00
Here we go.
SPEAKER_01
So you pay 28% if your income is over $48,000. Yep. Okay. Now you pay 17.5%
if your income is between 14,000 to 48. Yeah. And then you pay 10.5% if your income is up to $14,000. So it's usually children or people not working or people on benefit. Correct.
unknown
Yep.
SPEAKER_00
So again, get it right and make sure your provider knows what your PIA is. Most providers will have something on their on their client app or their client portal,
which you can go and input that and change it if you need to. But make sure you you keep up to date with it and make sure it changes with you.
SPEAKER_01
Exactly. Because that that's what I was about to say. That I think the biggest trap we see is where people just sat and forget.
SPEAKER_00
Correct.
SPEAKER_01
And this is not a thing here to set and forget because you could be overpaying and you cannot claim it back. We cannot stress this enough. But if you're underpay, they will come for you.
SPEAKER_00
And if you're having a break and it doesn't, you know, if if one of the parents is having a break to look after the kids, then obviously your salary is going to drop. Make sure you tell your provider because otherwise you're paying 28%.
SPEAKER_01
Yeah, absolutely. Awesome, Dave. Thank you so, so much. I think it really, really, really made things simple for people that always see that those three letters, yeah, PIR on their statements, and they just don't know what it means, how it works, how does it apply it to them. And it's a really good way for them to now go, huh? So what I want people to do right now is you're listening to this. If you're driving, obviously don't do that. But if you're listening to this and you're sitting in the office or
at home, in your bed, wherever, pull up your phone, pull up your apps, have a look. What sort of, and usually you would find it in your settings or under your profile.
SPEAKER_00
Yep.
SPEAKER_01
What sort of PIR are you currently on?
SPEAKER_00
It'll be clear to you, and then most portals will be clear to you what what rate you're on. If it's not clear, the IRD website, my IR, they'll have it on there as well.
SPEAKER_01
Ah, my IR. Awesome. Thank you so much. We did a really good job today. Awesome.
