Prospects for the development of mandatory funded and mixed pension systems

On September 28, 2023, an international high-level round table “Prospects for the development of compulsory funded and mixed pension systems” was held in Almaty, in which leading foreign and Kazakh experts took part. This event was held as part of the celebration of the 25th anniversary of the funded pension system of the Republic of Kazakhstan. The organizers of the Round Table were the Unified Accumulative Pension Fund of Kazakhstan (USAPF) in cooperation with the International Social Security Association (ISSA), which is a leading international organization uniting government agencies, organizations and departments in the field of social security. Opening the gala, ISSA President Dr. Mohammed Azman noted that “The changing landscape of pension systems and the challenges posed by global aging trends require constant collaboration and innovation. The Roundtable offers a unique platform for experts, policymakers and stakeholders from around the world to exchange views, best practices and chart a course for the future of pension systems. Together we can explore innovative solutions, harness technology and ensure that pension schemes remain robust, adaptable and responsive to the changing needs of our society. This event is significant not only for Kazakhstan, but also for the world community interested in the development of pension systems.” During the Round Table, such topical issues as pension provision, multi-level pension models, challenges, opportunities and solutions in funded and mixed pension systems, communications, financial literacy of the population and pension planning were discussed. Participants and guests of the Round Table were greeted by: Deputy Prime Minister of the Republic of Kazakhstan Tamara Duysenova, who presented an overview of the pension system in Kazakhstan; Chairman of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market Madina Abylkasymova with a report on the stages of development of the pension asset management system in Kazakhstan; Deputy Chairman of the National Bank of Kazakhstan Vitaly Tutushkin with a report on the main challenges to financial stability and adequacy of pension provision in Kazakhstan; Member of the Board (Minister) for Economics and Financial Policy of the Eurasian Economic Commission Bakytzhan Sagintayev with a report on pensions in the integration space of the Eurasian Economic Union; Chairman of the Council of the Association of Financiers of Kazakhstan Elena Bakhmutova with a report on the challenges and prospects for financial market participants within the framework of the funded pension system. The first part of the round table was concluded by the Chairman of the Board of UAPF JSC Zhanat Kurmanov with a welcoming speech to the participants of the event and a report on the topic: “Cumulative pension system of Kazakhstan: current state and development prospects.” In his speech, he noted that in Kazakhstan, as well as throughout the world, the number of people whose age exceeds 65 years is increasing. Therefore, the issue of providing for the population after the end of their working career is especially acute. The Chairman of UAPF JSC spoke about the Kazakhstan multi-level pension system, noting the increased importance of the savings component, and also reported how the indicators on savings and the number of pension accounts have changed over the years of UAPF operation, gave forecasts for the further development of the system, including the main parameter of the effectiveness of the pension system - the replacement rate for lost income, which according to international standards should be at least 40 percent.

 

At the first panel session of the round table “Population aging and pension reform,” its participants exchanged views and made presentations on assessing the effectiveness of pension systems and the historical experience of their reform, using the potential of international social security standards to create sustainable pension systems and social protection systems, experience the best pension systems in the world, prospects for their development, etc. The moderator was one of the architects of the Kazakh funded pension system and the developers of the pension reform, Grigory Marchenko. The speakers at the session were Senior Social Protection Specialist of the World Bank Himanshi Jain, Specialist in Legal Issues in Social Security of the ILO Department of Social Protection Krum Markov (Geneva, Switzerland), ISSA Regional Coordinator for Eurasia Dmitry Karasev (Geneva, Switzerland), FIAP President Guillermo Arthur (Santiago, Chile), Mercer Senior Partner Dr. David Knox (Melbourne, Australia), Greycells President, Dr. Alejandro Bonilla-Garcia (Geneva, Switzerland). The moderator of the second session on the topic “Coverage and awareness of the population” was a statesman, a famous Kazakh financier, chairman of the Kazakhstan Khalkyna Foundation, Bolat Zhamishev, who is one of the developers of the concept of pension reform and an active participant in its implementation. The session discussed strategic decisions to expand the coverage of social and pension systems, ways to increase awareness and financial literacy in the field of pensions, research on the level of financial literacy, etc. Presentations were made by Guillaume Fillon, Senior Manager of the Social Security Development Department of ISSA (Geneva, Switzerland), a representative of the Hebrew University, Dr. Abigail Gurwitz (Jerusalem, Israel), Senior Economist of Allianz SE, Dr. Michaella Grim (Munich, Germany), Member of the Directorate of the Social Security Bank Uruguay Ariel Ferrari (Montevideo Uruguay), OECD Financial Education Analyst Sonia Lalayan (Paris, France). Oraz Zhandosov, a Kazakh economist, manager and statesman, who was one of the authors of the reform of the pension system in Kazakhstan and, as Deputy Prime Minister, oversaw its formation in the most difficult early years, moderated the third panel session on the topic “Investment strategies, risk management and supervisory regulation." During the session, issues of global research on risk management, modern standards and trends in the field of regulation and supervision of pension funds, long-term investment strategies for asset management in social security systems, and international experience in the investment activities of pension funds were discussed. The speakers were: Partner, National Head of Enterprise Risk Management, KPMG Edouard Bertin-Muro (Toronto, Canada), IOPS President Ambrogio Rinaldi (Rome, Italy), Senior Advisor to the investment company Hassana, former Assistant Chairman at the General Organization for Social Security, Dr. Paul Sweeting (Riyadh, Saudi Arabia), General Director of the Bureau of Regulation of the Social Insurance Fund of the Ministry of Labor and Social Security of the People's Republic of China Xiaoli Tang (Beijing, China). The panel session on the topic “The future of social and pension systems: prospects and key drivers of development” was moderated by Kazakh financier and banker Anvar Saidenov, who was also at the origins of the pension reform. The session discussed some of the most pressing topics of our time: client-oriented design and flexible methodologies in social security institutions, digitalization of pension plan management, artificial intelligence, and the use of financial robo-advisor technology in pension planning. Speakers during the session included: Director of the Social Security Development Department of the ISSA Raoul Rouge-Frick (Geneva, Switzerland), Executive Director of the Agency for Supervision of the Compulsory Contributory Pension System Eric Cheng (Hong Kong, China), independent expert Brian Lee-Archer (Canberra, Australia ), Head of Investment Research and Academic Partnerships at Amundi, Dr. Marie Brière (Paris, France) At the conference, 26 reports were presented on current topics, emphasizing the importance of the pension sector worldwide and the further development of the funded pension system. You can find presentations of all speeches on the enpf.kz website in a special section dedicated to the event.