Fund manager reviews feedback from members who have qualified to withdraw KiwiSaver funds.

The KiwiSaver scheme celebrated five years of operation in July, which also means around 75,000 people of retirement age can now access their invested funds.

Under normal circumstances you can withdraw the money from your KiwiSaver fund when you turn the magical age of 65.

If you joined the scheme between the age of 60 and 65 you can dip into the money only once you've been in KiwiSaver for five years.

In last week's column, ASB's executive general manager of wealth and insurance Blair Turnbull answered a reader's question about the tax and payment information sent out when you close your KiwiSaver account.


Turnbull explained that all members receive a tax statement at the end of each March 31 financial year, usually sent out in May or June, detailing their share of the fund's taxable income and tax credits, and the portfolio investment entity (PIE) tax paid to Inland Revenue on their behalf.

Several readers responded, questioning why a detailed statement wasn't sent out when their funds were withdrawn.

Blair Turnbull responds: We process annual tax statements for all of our members as part of a streamlined process at the end of the financial year, in a similar manner to the way we process tax statements for other investment products - for example ASB EasyFunds.

We have not received customer feed-back that they would prefer to receive this information with their exit letter. However, we are always reviewing our products and services and will take the feedback from your correspondents into consideration.

Am I mistaken or does the Government get lots of tax money from KiwiSaver? I'm in the Gareth Morgan growth fund which lost money last year but I still had tax to pay.

When you are in KiwiSaver, your scheme provider invests your money on your behalf and any investment returns are subject to tax.

Growth investment portfolios generally have a high proportion of shares, which means they can be quite volatile - and there will be times when you get negative returns. But over the long term, returns should be higher than an investment portfolio with a lower proportion of shares.

Now, under New Zealand's tax system it is possible that you will have to pay tax even when you have a negative return.

This can happen if your portfolio includes offshore investments or receives dividends from New Zealand shares. That may seem unfair but those are the rules. However, it's not all bad news on the tax front.

Most KiwiSaver schemes are PIEs (portfolio investment entities), as this is generally the most tax efficient option for members.

If your KiwiSaver scheme is a PIE you are required to provide your KiwiSaver provider with a correct PIR (Prescribed Investor Rate).

The highest PIR is currently 28 per cent, which may be a lower tax rate than you would pay on other investments. We recommend you check your PIR each year.

•Joe Bishop, Kiwibank head of wealth products

I have been in KiwiSaver since the start and recently I finished my job and went back to study.

I am a mature student on a student allowance and I have always had my prescribed investor rate (PIR) at the highest level.

I finished work in January and haven't worked since.

Recently I got the statement from my provider saying that I can't claim any of the tax back I paid through KiwiSaver, even though I possibly have been paying too much tax.

But if I didn't pay enough I have to pay the difference.

Is it better to understate the PIR and pay the difference if it occurs?

One of the benefits of the PIE (portfolio investment entity) regime is that the fund takes care of any tax obligations (whether a refund or tax to pay) on behalf of each investor; there is nothing to include in your personal tax return.

It does get a bit trickier though when your income or employment situation changes.

Your PIR for the current tax year is actually determined by the income you have received in the prior two years, not what your current situation is.

So your change of circumstance back in January won't affect the PIR that was used for the year ending March 31, 2012.

We are now in the 2013 tax year and if your income in both of the two preceding years was more than $48,001 then you are still required to use a PIR of 28 per cent.

Legally, you cannot elect a PIR lower than you qualify for.

If you qualify for two different rates in the past two years, your PIR is the lower rate.

So if you were studying last year and your PIR works out to be lower than the previous year, you can use the lower rate.

•Carmel Fisher, Fisher Funds managing director

•Disclaimer: Information provided is stated accurately to the best of the adviser's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the NZ Herald's panel of industry players, email Helen Twose,