KiwiSaver FAQ - What is a PIR?
If you’re enrolled in the KiwiSaver retirement savings scheme, you may have heard the term PIR floating around. But what exactly is it?
PIR stands for Prescribed Investor Rate, and it’s the amount of tax that you pay on the money that’s in your KiwiSaver account. Given that KiwiSaver is an investment, any returns you make from this investment are taxed accordingly.
Depending on how much you earn, your PIR, the amount you will be taxed, will be 10.5%, 17.5% or 28%.
Almost 1.5 million Kiwis have the wrong PIR for their KiwiSaver earnings so it’s important that you have the correct rate assigned to your savings, otherwise you could be paying the incorrect amount of tax. Whether it’s too much or too little, that can land you in a tough financial position in the long run.
If you don’t actively specify the PIR for your KiwiSaver, it will be set to the default rate of 28% - that’s the highest rate and it means you might be paying more tax than you need to.
Which PIR should you be on?
The PIR that’s correct for you will depend on your income. The IRD has a helpful calculator you can use to work out the correct PIR for you. Y
How can you check your PIR?
If you want to check what PIR you currently have, login to your KiwiSaver account, or contact your KiwiSaver provider or the IRD.
It’s a good idea to check your PIR at the end of every financial year to make sure it’s still correct as your financial situation may have changed since you last checked. If you’ve started a new job or received a pay rise, it would be wise to check that your PIR is up to date too.
Paid too much?
No one likes to pay too much tax. Previously, you weren’t able to receive a refund for any excess tax, but fortunately that’s now changed. From the tax year 1 April 2020 to 31 March 2021 and going forward, you might be eligible for a refund if you’ve been paying a higher PIR rate than necessary. If you think you might be eligible for a PIR tax refund, get in touch with the IRD.
Paid too little?
If you’ve been paying tax at a lower PIR rate than you should be, you might have been underpaying. It’s best to check in with the IRD to make sure you’ve got it right and to avoid any further fees or penalties.
If you’d like to have a chat about your KiwiSaver and your Prescribed Investor Rate, we’re here to help! Click below to get in touch and book a free, no-obligation review of your KiwiSaver now.