Compound Interest Calculator
Compare how your money grows in a PIE fund, KiwiSaver, or savings account — with NZ tax applied automatically.
Used for Savings Account RWT rate. PIE Fund and KiwiSaver are taxed at the 28% PIR cap.
PIE Fund
$95,770
Growth: $25,770 · Tax: $10,022
Portfolio Investment Entity — taxed at your PIR (often lower than marginal rate)
KiwiSaver
$95,770
Growth: $25,770 · Tax: $10,022
PIE-taxed retirement fund — locked until 65, employer contributions included
Savings Account
$93,687
Growth: $23,687 · Tax: $11,667
Interest taxed at your marginal rate via RWT each year
Total Contributions
$70,000
PIE/KiwiSaver saves you $2,083 in tax compared to a Savings Account over 10 years
| Year | PIE Fund | KiwiSaver | Savings Account |
|---|---|---|---|
| 1 | $16,806 | $16,806 | $16,750 |
| 2 | $23,956 | $23,956 | $23,817 |
| 3 | $31,466 | $31,466 | $31,216 |
| 4 | $39,354 | $39,354 | $38,961 |
| 5 | $47,640 | $47,640 | $47,070 |
| 6 | $56,343 | $56,343 | $55,559 |
| 7 | $65,485 | $65,485 | $64,446 |
| 8 | $75,088 | $75,088 | $73,750 |
| 9 | $85,175 | $85,175 | $83,490 |
| 10 | $95,770 | $95,770 | $93,687 |
Understanding NZ Investment Tax
New Zealand taxes investment returns differently depending on the vehicle you use. PIE funds (including KiwiSaver) are taxed at your Prescribed Investor Rate (PIR), which is capped at 28%. Bank savings accounts and term deposits are taxed via Resident Withholding Tax (RWT) at your full marginal rate — up to 39%.
For anyone earning over $53,500, this means PIE funds pay less tax on the same return. Over many years, the compounding effect of lower tax makes a significant difference to your final balance.
KiwiSaver has the same PIE tax treatment but locks your funds until age 65 (with limited exceptions). In exchange, you receive employer contributions and may qualify for the government's member tax credit.
PIR vs RWT Rates
| Taxable Income | PIR (PIE/KiwiSaver) | RWT (Savings) | Difference |
|---|---|---|---|
| $0 – $15,600 | 10.5% | 10.5% | None |
| $15,601 – $53,500 | 17.5% | 17.5% | None |
| $53,501 – $78,100 | 28% | 30% | Save 2% |
| $78,101 – $180,000 | 28% | 33% | Save 5% |
| $180,001+ | 28% | 39% | Save 11% |
Frequently asked questions
What is a PIE fund and how is it taxed?
A Portfolio Investment Entity (PIE) is a type of NZ managed fund that is taxed at your Prescribed Investor Rate (PIR) — 10.5%, 17.5%, or 28% — rather than your marginal income tax rate. The maximum PIR is 28%, which benefits anyone earning over $53,500.
What are the PIR rates in New Zealand?
There are three PIR rates: 10.5% (taxable income up to $15,600), 17.5% ($15,601–$53,500), and 28% ($53,501 and above). Your PIR is based on your taxable income in either of the two previous income years. You must tell your PIE provider your correct PIR.
How is KiwiSaver taxed?
KiwiSaver funds are PIE funds, so your returns are taxed at your PIR (max 28%). Withdrawals are tax-free. The key difference from other PIE funds is that KiwiSaver is locked until age 65 (with exceptions for first-home purchase, serious illness, or significant financial hardship).
What is RWT and how does it apply to savings accounts?
Resident Withholding Tax (RWT) is deducted from interest on bank savings accounts and term deposits. Your RWT rate matches your marginal income tax rate — 10.5%, 17.5%, 30%, 33%, or 39%. Unlike PIE funds, savings interest is taxed at your full marginal rate with no 28% cap.
Why does a PIE fund beat a savings account for higher earners?
If you earn over $53,500, your marginal tax rate is 30%–39%, but PIE income is capped at 28%. This means PIE fund returns keep more after tax each year, and the difference compounds over time. Over 20–30 years, the tax saving can add up to tens of thousands of dollars.
Can I withdraw from KiwiSaver before 65?
You can make an early withdrawal for a first home purchase (after 3+ years of membership), in cases of significant financial hardship, serious illness, or if you permanently emigrate (after 1 year). Otherwise, funds are locked until you reach the NZ Superannuation age of 65.
How does this calculator model compound interest?
The calculator assumes annual compounding. Each year, your balance plus that year's contributions earn the stated return. Tax is deducted from positive growth at the applicable rate (PIR for PIE/KiwiSaver, marginal rate for savings). Negative returns are not taxed. Monthly contributions are modelled as a lump sum at the start of each year for simplicity.
Should I use a PIE fund or direct shares?
PIE funds offer a tax advantage on income (dividends and interest) for anyone earning over $53,500. However, NZ does not generally tax capital gains on shares held on capital account. If your returns are mostly capital gains, the PIE tax advantage is less significant. Consider your investment mix and goals.
Sources
Last updated April 2026. Rates sourced from IRD. This calculator assumes returns are fully taxable income and uses annual compounding. It does not account for capital gains, FIF rules, employer contributions, or government member tax credits.