Today, Kazakhstan has a multi-level pension system. What does it mean? This means that Kazakhstanis who have reached retirement age will receive a pension from several sources: solidary, basic and payments from the UAPF. Let's look at each type of pension in detail.
Solidary pension. Persons who have at least six months of work experience before January 1, 1998 have the right to a solidary pension. To calculate a solidary pension, two indicators are taken: work experience before January 1, 1998 and the amount of salary for 36 calendar months after January 1, 1998. At the same time, it should be noted that the upper limit of the average monthly income should not exceed 46 minimum calculated indicators (MCI), which in 2022 is 146,280 tenge. From 2023, this figure is planned to increase to 55 MCI.
To receive a solidary pension in full, the length of service should be 20 years for women and 25 years for men. If the length of service is not enough, the pension is reduced in proportion to the length of service. So, with full experience, the maximum solidary pension this year is 87,768 tenge. But the fact is that retiring this year, in order to get a full length of service, it was necessary to start working: men – at 14 years old, and women – at 16-17 years old. And every year, the seniority of those retiring before 1998 will decrease and the day is not far off when those who did not work before 1998 will retire. This will happen already in the 2040s.
Basic pension. The basic pension is assigned to everyone, regardless of the presence of work experience or its absence. If the experience of participation in the pension system is 10 years or less or even completely absent, the pensioner is assigned a basic pension of 54% of the subsistence minimum (PM), this year it is 20,191 tenge. From 2023, the minimum basic pension is planned to be increased to 70% of the PM. For each year over 10 years, 2 percent is added, but not more than 100% of the PM – 37,389 tenge (in 2022). Next year, this figure is planned to increase to 120%.
Payments from the UAPF. This is the third component of today's pension. Since January 1, 2018, payments from the UAPF are made monthly according to the schedule. Persons who have pension savings in the UAPF and have reached retirement age are entitled to these payments. This year, men go on a well-deserved rest at 63 years old, women at 60.5 years old. From next year until 2028 inclusive, women will retire at the age of 61.
To calculate the amount of the monthly payment, the following method is used: the amount of pension savings is multiplied by 6.5% and divided by 12. In the future, the amount of payments will increase annually by 5%. At the same time, the minimum monthly payment cannot be lower than 70% of the subsistence minimum. For example, the amount of pension savings is 3,000,000 tenge. According to the above methodology, the estimated monthly payment amount will be 16,250 tenge (3,000,000 x 6.5%: 12 = 16,250). At the same time, the actual amount of monthly payments in 2022 will be 26,172.30 tenge. Payments from the UAPF are made until they are exhausted.
"So what should those who have no experience before 1998 do, or it is small and the work is not the highest paid? Is this category of Kazakhstanis really going to be forced to drag out a sad existence in retirement?" - perhaps these are the most frequently asked questions. In order to provide a decent pension for the current youth, further modernization of the pension system is planned. As part of the modernization, it is supposed to introduce another mandatory component – mandatory employer pension contributions (OPVR). This is a new component of the accumulative pension system, the introduction of which is planned for 2024.
OPVR will increase the level of pension provision by dividing the responsibility for pension provision between the state, the employee and the employer. This type of pension contributions will be formed at the expense of the employer's mandatory pension contributions, transferred in favor of the employee to his pension account in the UAPF, in the amount of 5% of the employee's monthly income.
In order to maintain a balanced burden on the employer, the possibility of a phased introduction of OPVR from 2024 with a gradual increase in the contribution to 5% is being considered.
The introduction of mandatory employer pension contributions will provide future pensioners with a decent pension.