The important thing is not to get bogged down in the detail. What matters is the return. Cash PIEs offer interest rates, which are competitive with equivalent savings accounts as well as a small tax advantage.
The return is best for 33% tax payers, although 30% tax payers benefit as well. For example, if the advertised interest rate is 3%, a 30% tax payer gets an effective rate of 3.11% and a 33% taxpayer 3.25%. That additional return adds up.
Nor is it difficult to invest in Cash PIEs, or to get your money out. Most banks provide Cash PIEs, which can be setup online or over the phone with any additional paperwork to sign sent through the mail.
There’s no reason that savers have to stick with their existing banks for Cash PIEs. There’s always the option of shopping around for a better rate.
Term PIEs are becoming increasingly popular with savers in New Zealand. With term PIEs you get a higher interest rate in return for locking your money up for longer ““ as you would with a regular term deposit.
Finally, don’t get confused by the detail. Cash and Term PIEs can be mind boggling for consumers, but the increased return on your savings is worth considering.