KiwiSaver comes with its fair share of jargon. Here's a plain-English guide to some of the terms you'll come across within a KiwiSaver Scheme.
Growth assets
These are assets like shares and listed property, held with the aim of growing in value over time. They tend to offer stronger long-term return potential than income assets — but that comes with more short-term ups and downs along the way, so they're considered higher risk.
Income assets
Assets like bonds (fixed interest) and cash sit in this category, and they typically pay their return as regular interest rather than a change in value. Returns tend to be more modest than growth assets, but steadier — which is why they're considered lower risk.
Risk indicator
Every KiwiSaver fund in New Zealand carries a standard risk indicator, rated from 1 (low) to 7 (high), reflecting how much a fund's returns might move around. Generally, higher risk means higher potential returns over the long term but bigger swings along the way; lower risk means smaller potential returns with a steadier ride.
You'll find this for each fund in the Hive KiwiSaver Scheme Product Disclosure Statement and on our website.
PIE (Portfolio Investment Entity)
Your KiwiSaver Scheme is set up as a PIE — a type of investment structure that generally means your investment returns are taxed more favourably than if you'd invested the same money directly. It's a big part of why KiwiSaver can be such a tax-efficient way to invest.
PIR (Prescribed Investor Rate)
This is the tax rate applied to your share of the fund's returns, based on your income over the past two years. It's worth getting right — set it too low and you could end up with tax to pay; too high and you might be paying more than you need to. If your income has changed recently, it's a good idea to check your PIR is still correct.
Got questions?
If there's anything you'd like to understand more about, talk to your Adviser or get in touch with the Hive Client Care Team on 0800 242 023 or hello@hive.co.nz.
