Place a steamer inside a multi-functional pressure cooker (such as Instant Pot(R)). Add 1 cup water to the pot. Place potato chunks into the steamer. Close and lock the lid. Select Rice function and set timer for 10 minutes. Allow 10 to 15 minutes for pressure to build.
Release pressure using the natural-release method according to manufacturer's instructions, 10 to 40 minutes. Unlock and remove lid. Add 1/4 cup plus 1 tablespoon cream cheese and milk to the pot and mash using an electric hand mixer or a potato masher. Season with salt and pepper.