# KiwiSaver Calculation Methodology

> How gross returns, individual PIE tax, ESCT and government contributions are represented in KiwiSaver scenarios.

The KiwiSaver model estimates account balances from your return assumptions, contributions, investment tax and fees. It is a simplified numerical forecast; it does not determine eligibility or the tax treatment of a particular fund or person.

## Gross return inputs

**Earning Rate** and **Capital Growth Rate** are before PIE investment tax and separately entered account fees. They are not net-return fields. Entering a return that already includes these deductions would deduct them again.

The editable starting assumptions are 5% earnings and 1% capital growth, both expressed as APR compounded monthly. They are illustrative assumptions retained from the existing account model, not a forecast for a particular fund. Fees initially have no deduction; enter the fees you want represented. Assumptions reviewed 9 September 2026.

Earnings are a proxy for taxable PIE income. Capital growth is excluded from that income unless you enable **Include capital growth in taxable PIE income**. Actual funds can have exempt gains, deemed foreign investment income, tax credits and losses that this two-component model cannot reproduce. Choose the inputs to represent the gross return and taxable share you intend to model.

Deposits receive earnings and capital growth from their assumed deposit dates. APY inputs are effective annual yields. Fixed fees follow their frequency and are prorated for shorter periods; balance fees are annual percentages, also prorated. Income-based fees apply to the earnings in that period.

## Individual PIE tax

The account owner's prescribed investor rate (PIR) is calculated from the previous two completed income years. For the current policy, a year qualifies for:

| PIR   | Taxable income excluding PIE | Taxable income plus net taxable PIE income |
| ----- | ---------------------------- | ------------------------------------------ |
| 10.5% | At most NZ$15,600            | At most NZ$53,500                          |
| 17.5% | At most NZ$53,500            | At most NZ$78,100                          |
| 28%   | Otherwise                    | Otherwise                                  |

Both limits must be satisfied in the same year. The lower qualifying rate from either year applies. PIE losses can offset PIE income for these tests but cannot reduce other taxable income.

Starting PIR uses each person's initial annual income in the scenario, converted to nominal NZ dollars. This sums their annual earned income, RSU income and recurring property income, splitting jointly owned income equally. It uses the full annual amounts even when the scenario starts partway through a year. No past income details are required.

This starting estimate stands in for each unavailable prior year, with zero prior taxable PIE income assumed. Completed simulated calendar years replace the estimate as they become available, using the person's modelled taxable income and taxable PIE income from all their KiwiSaver accounts. A partial first year continues to use the starting estimate. The initial income-only approximation can understate or overstate the actual PIR, especially where earlier income or PIE earnings differed.

The NZ residence assumption initially applies. Turning it off uses 28% PIR and excludes government contributions. This is a fixed scenario assumption, not a residence or migration assessment. Special migrant elections and foreign PIE rules are not represented.

## Employer contribution tax

ESCT is deducted separately from gross employer contributions before money enters the account. Employee contributions are taken from available after-tax cash.

The current ESCT bands are 10.5% up to NZ$18,720; 17.5% up to NZ$64,200; 30% up to NZ$93,720; 33% up to NZ$216,000; and 39% above that. The rate applies to the entire employer contribution. It uses the prior complete year's salary and gross employer contributions for that income source. With no complete employment history, it uses the current annual salary and employer contribution estimate.

## Government contributions

Dated policy configuration supplies the matching rate, annual cap, age range and income ceiling:

| Contribution dates       | Match per employee dollar | Maximum per year |
| ------------------------ | ------------------------- | ---------------- |
| 1 July 2007–30 June 2011 | NZ$1                      | NZ$1,042.86      |
| 1 July 2011–30 June 2025 | NZ$0.50                   | NZ$521.43        |
| From 1 July 2025         | NZ$0.25                   | NZ$260.72        |

The latest policy is held constant for future years until the configuration is updated. It uses ages 16 to before 65 and an annual taxable-income ceiling of NZ$180,000. Earlier policy uses age 18 as the lower age. Older membership lock-in exceptions are not represented.

Only employee payments made through KiwiSaver contribution rules count toward the match. Employer contributions, growth, rollovers and transfers do not count. Multiple rules and accounts share one allowance per person, allocated between their accounts in proportion to employee contributions. General saving rules and unmodelled direct payments are not counted.

## Calendar and currency approximations

The forecast uses calendar years in place of the NZ April–March tax year and July–June contribution year. PIR and ESCT policy changes apply from the configured calendar year. Government policy changes are split by their actual effective dates, with contributions spread uniformly within a simulated period.

Government credits are added at the end of the calendar year, after taxable income is known, and earn growth from the next period. This differs from a June-year calculation and the provider's actual payment date. Caps are prorated by eligible days within the simulated membership and age window; birth dates use the first day of the entered birth month. For a partial simulated year, the income-ceiling check annualises the available taxable income. These approximations can change results near eligibility dates or thresholds.

Threshold comparisons use nominal NZ dollars and the simulation's fixed exchange-rate assumptions. Display inflation and wage growth remain separate scenario settings; this feature does not replace them or index statutory thresholds automatically.

Review the assumptions and limitations before comparing account balances. These estimates must not be relied on to make a financial-product decision; consider advice from an Australian financial services licensee before making financial decisions.

Canonical page: https://planindecades.com/help/finances/features/kiwisaver-methodology/