The amount of pension savings of depositors of the Unified Accumulative Pension Fund as of June 1, 2022 is about 12.8 trillion tenge. As you know, this amount includes the pension contributions of depositors and investment income.
The share of investment income in pension savings is growing annually. In general, the net investment income provided by the National Bank since 2014 (the end of the process of combining all pension assets into the UAPF) amounted to 5.9 trillion tenge. If we consider the investment income from the beginning of the operation of the accumulative pension system in Kazakhstan, it amounts to 6.8 trillion tenge.
Since the beginning of this year, amid the deterioration of the geopolitical situation, volatility in the global financial and commodity markets has increased, which affected both the growth of inflation and the profitability of pension assets. Thus, the profitability of pension assets is changing due to the market and currency revaluation of financial instruments, which has been both positive and negative in different periods since the beginning of the year.
Pension savings are invested in financial instruments in different currencies. About 2/3 of investments are placed in tenge and about 1/3 - in foreign currency, most of the foreign currency investments are in US dollars. Accordingly, the dollar exchange rate is reflected in investment income as part of pension assets: with the strengthening of the national currency, investment income may decrease, with an increase in the dollar exchange rate, it may grow. In general, it is worth emphasizing that since 2014, the currency share of pension assets has increased from 17% to 29%.
From January to the beginning of March 2022, the tenge exchange rate weakened against the US dollar from 431 tenge to 495 tenge and in mid-March to 512 tenge. Thus, there was a positive currency revaluation of pension assets on a weekly basis. Depositors have seen significant positive investment income in their individual retirement accounts. Then the national currency began to strengthen, the dollar exchange rate, respectively, declined. As of June 1, it amounted to 414.67 tenge per 1 dollar. Since the revaluation of pension assets is carried out weekly and on the last day of the month, depositors see changes in their statements.
As a result, negative events in the financial markets and currency revaluation of assets had an impact on investment profitability, which over the past 12 calendar months amounted to 4.14%.
It is worth emphasizing that pension savings are long–term investments and it is advisable to analyze the amount of investment income for a period of at least 1 (one) year. Short–term data (weekly, monthly, etc.) are not indicative, because they depend on constant changes in market conditions.
For example, the amount of net investment income for the past 2021, distributed to the pension accounts of depositors (recipients), amounted to about 1.4 trillion tenge, which exceeded the amount of contributions received for the year (1.3 trillion tenge). The yield on pension assets of the UAPF in 2021 under the management of the National Bank of Kazakhstan since the beginning of the year amounted to 11.13%, with inflation of 8.4%.
From April 2014 to June 1, 2022, when the consolidation of pension assets was completed, the yield under the management of the NBK was 99.94%. The investment yield since the foundation of the accumulative pension system (1998) on June 1, 2022 with an increasing total amounted to 670.58% with inflation for the entire period of 603.68%. Thus, the real (i.e. exceeding inflation) return on pension assets for the period from the beginning of the accumulative pension system on June 1, 2022 amounted to 66.90%.
The entire system of investment management and accounting of pension assets is transparent: each depositor has the opportunity to see his investment income in his personal account on the enpf website.kz or in the mobile app.
Information on the investment management of the pension assets of the UAPF and on the financial instruments in which the pension assets of the UAPF are placed is published on the official website of the UAPF (www.enpf.kz ) in the section "Indicators/Investment activity".