New procedure for transferring pension savings from UAPF to insurance organizations under a pension annuity agreement

ANNOUNCEMENT

New procedure for transferring pension savings from UAPF to insurance organizations under a pension annuity agreement

From January 1, 2024, the provisions of the Social Code of the Republic of Kazakhstan and Rules No. 44 will come into force, providing for the optimization of the procedure for transferring pension savings from the Unified Pension Fund to insurance organizations under pension annuity agreements (hereinafter referred to as PAA).

Innovations in the legislation will allow contributors (beneficiaries) from January 01, 2024 to apply only to the selected insurance organization to conclude a PAA without further contacting the UAPF with an application to transfer pension savings to the insurance organization.

At the same time, the procedure for transferring pension savings from the UAPF to the insurance organization from January 01, 2024 is as follows:

• Insurance organizations will exchange data on concluded PAA with State Credit Bureau JSC (SCB) by transferring information on concluded PAA to the unified insurance database (UIDB), the operator of which is SCB
• SCB, on the basis of an appropriate agreement with the UAPF, will transfer to the UAPF information on concluded PAA received from insurance organizations. The procedure and timing of data exchange through SCB under concluded PAA are regulated by Rules No. 44
• The UAPF, upon receiving information from SCB in accordance with Rules No. 44, will reconcile data on policyholders (persons who have entered into a PAA with an insurance organization) with the available data in its information system and the information systems of other government bodies, in accordance with which it will transfer pension savings to insurance organization within 5 working days from the date of receipt of information from SCB about the concluded PAA
• The insurance organization will notify the policyholder within 5 working days from the date of receipt of pension savings from the UAPF about their receipt, indicating the amount and the entry into force of the PAA.

We remind you that a pension annuity is a financial insurance instrument that allows you to receive a “pension” ahead of schedule, provided that pension savings are sufficient to ensure a monthly insurance benefit from an insurance organization of at least 70 percent of the cost of living in effect on the date of conclusion of a PAA by an individual with an insurance organization.

It should be noted that for persons who have transferred their pension savings to insurance organizations, the state guarantees the safety of compulsory pension contributions, compulsory occupational pension contributions to the UAPF in the amount of actual contributions made, taking into account the level of inflation, made for the period from the date of the last transfer of pension savings to insurance organizations until they reach the generally established retirement age. That is, the state guarantee of the safety of pension savings does not apply to pension savings transferred to insurance organizations.

Before deciding to transfer your pension savings to them, we recommend that you carefully study the terms of the PAA and analyze in detail both methods of receiving payments: from the UAPF or from an insurance organization through the conclusion of a PAA.

Calculations on the calculator presented on the UAPF website can help in making a decision, allowing you to compare the size of the pension benefit from the UAPF and a possible insurance benefit from an insurance organization under PAA.

Please also note that as of September 2022, changes in pension legislation came into force, according to which persons who entered into a PAA have the right no earlier than two years from the date of its conclusion to apply to the insurance organization with an application to change the terms of the PAA in terms of reducing the amount of insurance benefits and return of money to the UAPF.

If we talk about current statistics, then since the beginning of 2023, as of October 1, 2023, 4,037 citizens transferred pension savings under PAA to insurance organizations in the amount of KZT21.9 billion. At the same time, the amount of funds to be returned, received from insurance organizations when changing the terms of the PAA, amounted to KZT10.9 billion from 1,927 contributors.

It should be noted that, by accounting for over KZT17 trillion on more than twelve million contributor accounts, the UAPF continues to expand the mobile capabilities of citizens and actively integrate digital technologies into its operations. For the purpose of prompt services, the UAPF exchanges data with information systems (databases) of government agencies, while guaranteeing the safety of personal data.

The pension system in Kazakhstan provides contributors with more and more opportunities for planning pension capital and material security after retirement.

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The UAPF was established on August 22, 2013 on the basis of GNPF APF JSC. The UAPF founder and shareholder is the Government of the Republic of Kazakhstan represented by the State Institution “Committee of State Property and Privatization” of the Ministry of Finance of the Republic of Kazakhstan. UAPF pension assets are managed by the National Bank of the Republic of Kazakhstan. From January 1, 2016, the functions for developing proposals to improve the management of pension assets were transferred to the National Fund Management Council. In accordance with the pension legislation, the UAPF attracts compulsory pension contributions, compulsory occupational pension contributions, voluntary pension contributions, pension benefits, individual accounting of pension accumulations and benefits, provides the contributor (beneficiary) with information on the status of his pension accumulations (for more information visit www.enpf.kz)