Having PIE and saving too

Kiwibank yesterday launched new savings accounts that will allow some savers to take advantage of the Portfolio Investment Entities (PIE) legislation that limits tax on interest to 30 per cent.

With conventional accounts, tax on interest is 33 per cent or 39 per cent depending on the customer's income.

Kiwibank is offering a premium term deposit for 150 days that can provide an effective interest rate of more than 10 per cent for those in the highest tax bracket.

The PIE options also include an online call account with an interest rate of 8.3 per cent (provided no withdrawals are made during a month).

This equates to a rate of 9.5 per cent to an investor in the 39 per cent tax bracket.