KiwiSaver Returns Before vs After Fees and Tax 2026 (NZ): What You Actually Keep

The return on the brochure is not the return in your account. Here is the gross-to-fee-to-tax waterfall, with real 2026 fees and PIR figures, and how to keep more of it.

The return on the brochure is a gross number. The return in your account is what is left after the fund takes its fee and Inland Revenue takes its tax. Those are two very different numbers, and the gap between them compounds for decades.

This guide walks the full waterfall, from gross return down to the net-net figure you actually keep, using real 2026 New Zealand fees and prescribed investor rates. Then it shows you the three levers that lift your net return.

TL;DR: A KiwiSaver fund grossing around 6% a year does not put 6% in your account. After an average growth-fund fee of 1.07% and PIE tax at your PIR (up to 28%), a typical member nets close to the FMA's 4.5% "growth" projection assumption ¹. Switching from an average fee to a 0.24% fee keeps roughly 0.8 percentage points more each year.

Why advertised returns aren't what you keep

When a provider advertises "10% last year," that figure is almost always quoted after the fund's own management fee but before the tax you pay on the income inside the fund. Some marketing quotes the gross return before any fee at all. Either way, it is not the number that lands in your balance.

Two deductions sit between the headline and your money:

1. The fee — what the provider charges to run the fund, taken out as a percentage of your balance every year whether the fund goes up or down.

2. PIE tax — KiwiSaver is a Portfolio Investment Entity, so the income it earns is taxed at your prescribed investor rate (PIR) of 10.5%, 17.5% or 28%, generally deducted inside the fund before you ever see it ⁶.

Get either of these wrong and you quietly leak return for years. The good news is both are fixable.

Are advertised KiwiSaver returns before or after fees and tax?

Advertised and fund-update returns are usually shown after the fund's management fee but before the PIE tax you personally pay at your PIR. Some marketing uses gross (pre-fee) returns. Your annual statement projection is the exception — the FMA requires it to be shown after fees and after 28% tax ¹.

Step 1: gross return vs return net of fees

The fee is charged on your whole balance, not on the return. So on a $30,000 balance, here is what the same fund costs depending on who runs it:

\*Simplicity charges a flat 0.24% p.a. on its KiwiSaver and investment funds, with no annual membership fee. This is the current rate, reduced from 0.25% effective 1 September 2025 ⁹.

The average growth fee of 1.07% breaks down as management 0.92%, other charges 0.10% and a membership fee of 0.05% ⁷. Across the whole KiwiSaver system, the FMA's 2025 Annual Report counted $868.5 million of fees deducted in the year to 31 March 2025, up 10%, sitting at a stable 0.7% of the $123 billion under management ⁸.

So if a growth fund grosses about 6% before fees, by our calculation the average member is left with roughly 4.9% after a 1.07% fee (6.00% − 1.07% ≈ 4.93%), before tax even enters the picture.

Step 2: then PIE tax at your PIR

Now the income the fund earned gets taxed at your PIR. There are only three individual rates, and the rate you should be on depends on your income over the previous two tax years ².

If you never tell your provider a PIR, the default of 28% applies — which means lower earners often overpay tax inside their fund for years without realising ².

Here are the thresholds in effect from 1 April 2025 ³:

What PIR should I be on?

Work down the table: you qualify for the lowest rate whose both tests you meet. A part-time worker or a child on $14,000 should be on 10.5%, not the 28% default. A member on the default 28% who should be on 17.5% pays an extra 10.5 cents of tax on every dollar of fund income, for no reason.

Putting it together: the return waterfall

Here is the full drop from headline to what you keep, on a growth fund grossing roughly 6%.

From gross return to what you keep (flow)

``` Gross return ~6.00% ← the brochure / market return minus fee -1.07% ← average growth-fund total fee <sup>7</sup> = net of fees ~4.93% ← our calculation (6.00% - 1.07%) minus PIE tax (at your PIR, on the taxable income portion only) = NET-NET return ~4.50% ← the FMA's standard growth projection assumption <sup>1</sup> ```

Sources: Sorted Smart Investor fees ⁷; IRD PIR ²; FMA projection assumptions ¹.

That ~4.5% net-net figure is the FMA's published assumption rather than a number derived line-by-line. PIE tax applies only to the taxable income portion of the return, not the full ~4.93%, so the precise drop depends on the fund's income mix. The FMA's 4.5% growth assumption is used here because it models the experience of a real member, after fees and after 28% tax ¹ — it is the closest published, standardised "what you keep" figure for a growth fund.

Worked example: the same fund, two fees

Scenario: Two members, both 40, both with $30,000 in a growth fund grossing ~6% a year, both on a 28% PIR. One is in an average-fee fund (1.07%), the other in Simplicity Growth (0.24%).

The low-fee member keeps roughly 0.8 percentage points more every year (1.07% − 0.24% = 0.83pp) ⁷⁹. On a balance that grows over a 25-year working life, that 0.8% is not loose change — it is tens of thousands of dollars of final balance, purely from the fee line. Run your own numbers with our KiwiSaver growth calculator.

For context on what real low-fee funds have actually delivered, the Simplicity KiwiSaver Growth Fund returned 18.01% over the year and a 8.44% annual average over the five years to 31 May 2026 (both before tax and after the 0.24% fund charge) ⁹. On the fundcompare.co.nz cohort it remains one of the lowest-cost growth options, with a management fee well below the diversified-fund peer average ¹⁰. (Note these are headline fund returns before PIE tax; your own after-tax figure depends on your PIR.)

Why FMA statement projections are shown net of fees and 28% PIR

When you open your annual KiwiSaver statement, the projected balance and retirement income are not built on the brochure return. The FMA prescribes a standard set of assumptions so every provider's statement is comparable, and every figure is shown after fees and after tax at 28% PIR ¹.

The annual return assumptions, by fund type, are ¹:

A few things to know about how the FMA builds these projections ¹:

• It uses an average fee for the fund type, not your actual fee — so if you are in a cheaper fund your real outcome can beat the statement.
• It assumes tax at 28% (the highest and most common rate), so lower-PIR members are slightly understated.
• Figures are inflation-adjusted at 2% a year, your pay is assumed to grow 3.5% a year, and after age 65 the balance is assumed to earn 2.5% after fees and tax while you draw it down over 25 years to age 90.

The takeaway: those projection numbers are deliberately conservative, member-realistic figures. If your fund is cheaper and your PIR is lower than 28%, you may quietly do better than the statement suggests.

How to lift your net return (fees, PIR, fund fit)

You cannot control the market. You can control all three of the things that decide what you keep.

Lever 1: fees

A dollar of fee you do not pay is a dollar that stays invested. The gap between an average growth fund (1.07%) and a low-cost index fund is real money ⁷:

The next two rows are optional context — they are not KiwiSaver funds and sit outside the like-for-like growth-vs-growth comparison above:

Low fees are not automatically the right answer for everyone — but a high fee has to be justified by the fund actually doing something different. Compare like-for-like with our KiwiSaver fund comparison service.

Lever 2: your PIR

Check your PIR against the thresholds above ³. If you are on the 28% default but earn under $53,500, you are very likely overpaying tax inside your fund. Fixing it is a five-minute phone call to your provider, and it is one of the most common issues a review picks up.

Lever 3: fund fit

A growth fund's higher long-run return is only useful if you can stay in it through a downturn without panic-switching at the bottom. Fund fit is about matching the fund's volatility to your time horizon and temperament — someone three years from a first-home withdrawal should not be in the same fund as someone 30 years from retirement. That is the conversation a KiwiSaver review is built around.

Your net-return checklist

01. Find your fund's total annual fee (your provider's fund update or Sorted Smart Investor). Anything well above ~0.5% for an index-style fund deserves a question.

02. Confirm your PIR against the IRD thresholds — 10.5%, 17.5% or 28% ²³. If you have ever ignored the form, you are probably on the 28% default.

03. Compare your fund's net-of-fees-and-tax return to peers, not its gross headline. Like-for-like, growth vs growth.

04. Check fund fit against your time horizon — first-home, retirement, or somewhere in between.

05. Re-test your contribution rate. From 1 April 2026 the default rate is 3.5%, with options of 3%, 3.5%, 4%, 6%, 8% and 10% ⁴⁵.

06. Book a review and have an adviser run the waterfall on your actual balance — start with our free KiwiSaver health check or book a review.

Frequently asked questions

What is a PIR and how do I know mine?

Your prescribed investor rate is the tax rate applied to the income your KiwiSaver earns. It is 10.5%, 17.5% or 28%, based on your income over the previous two tax years. Use the IRD thresholds: 10.5% if taxable income is $15,600 or less and total income $53,500 or less; 17.5% up to $53,500 / $78,100; otherwise 28% ²³.

What happens if I never set my PIR?

The default rate of 28% applies. If your income means you should be on 10.5% or 17.5%, you overpay tax inside your fund every year until you fix it — one call to your provider resolves it ².

Why is my statement projection lower than the return my fund advertises?

Because the statement is shown after fees and after 28% tax, and uses conservative FMA assumptions — 4.5% for growth, 3.5% for balanced, 2.5% for conservative, adjusted for 2% inflation ¹. The advertised return is typically gross of tax and sometimes gross of fees.

How much difference does a lower fee really make? On a growth fund, moving from the ~1.07% average to a ~0.24% fee keeps roughly 0.8 percentage points more return each year ⁷⁹. Because that saving compounds on a growing balance for decades, the difference in final balance runs into the tens of thousands of dollars.

Does a cheaper fund always mean a better outcome? Not always — but the fee is one of the few things you can predict with certainty, and a higher fee should be earning its keep with genuinely different management or assets. Like-for-like (growth vs growth), the lower-fee fund starts every year ahead.

General information, not personalised financial advice. Seek advice tailored to your situation before acting. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 16 June 2026.