Compound Interest Calculator

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 most people once their taxable income (RWT/PAYE terms) exceeds $53,500 — but because the PIR income thresholds are lower ($14,000/$48,000/$70,000) than the RWT brackets, some people with $48,001–$53,500 of taxable income are already stuck at the 28% PIR even though their marginal/RWT rate is only 17.5% — see the PIR vs RWT table below.

There are three PIR rates — 10.5%, 17.5%, and 28% — but they are not a simple current-income lookup like PAYE brackets. IRD tests each of your last two completed tax years against two figures: your taxable income excluding PIE income, and that figure plus your PIE income ('total income'). You get 10.5% only if both figures are ≤$14,000 and ≤$48,000; 17.5% if both are ≤$48,000 and ≤$70,000; otherwise 28%. Your PIR for the year ahead is the lower of the two rates implied by your last two years. Because these thresholds ($14,000/$48,000/$70,000) are lower than the RWT/PAYE brackets ($15,600/$53,500/$78,100/$180,000), someone with $48,001–$53,500 of taxable income is often already capped at the top 28% PIR — higher than the 17.5% RWT rate the same money would attract in a standard savings account.

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).

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.

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.

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.

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.

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.