On the procedure for transferring pension savings to management companies
Since January 2021, legislative norms have come into force that grant citizens the right to use part of their pension savings not only to improve housing conditions and (or) pay for treatment, but also to transfer them to investment management companies (investment portfolio managers – IPOs).
According to the Law on Pension Provision, the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market:
- develops and approves the requirements for the UIP, which can be transferred to the trust management of pension assets, as well as the list of financial instruments allowed to be acquired at the expense of pension assets;
- monthly maintains and publishes on its Internet resource a register of UIPS that meet the requirements for pension asset management activities.
The depositor will also be able to get acquainted with the list of existing UIPS and their proposed investment declarations on the UAPF website www.enpf.kz.
To transfer pension savings to the trust management, it is necessary to:
from the UIP side:
1) compliance with the requirements established by the regulatory legal act of the authorized body-the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market;
2) entering the UIP in the register of the authorized body;
3) the existence of an agreement on the trust management of pension assets concluded between the UAPF and the UIP;
4) the existence of a custodial agreement concluded between the UAPF, UIP and the custodian bank.
on the part of the depositor:
1) the presence of a written application of the depositor on the choice of the UIP, submitted to the UAPF;
2) the presence in the individual pension account of the depositor in the UAPF of funds sufficient to transfer to the UIP.
The pension savings of the depositor can be transferred to the management of the UIP:
- in an amount not exceeding the difference between the actual amount of the depositor's pension savings in the UAPF and the threshold of the minimum sufficiency of pension savings; or
- in the amount not exceeding the balance of pension savings on the depositor's account in the UAPF, if there is a pension annuity agreement with an insurance company that provides for lifetime payments.
To transfer pension savings to one or more UIPS, the depositor must apply to the UAPF with an application. The application can be submitted through the personal account on the enpf website.kz or with a personal request to any regional branch of the UAPF.
The UAPF transfers the part of pension savings that exceeds the amount of sufficiency to the trust management of the UIP within thirty calendar days after the date of receipt of the application from the depositor. The remaining part of the depositor's pension savings will continue to be managed by the National Bank.
Pension savings transferred to the investment management of the PPI do not relate to withdrawals of one-time pension payments (as in the case of withdrawals for housing improvement and/or treatment) and will not be subject to individual income tax at the time of their transfer to the PPI.
After receipt of pension assets from SAPF WHIP invests them in the permitted financial instruments specified in the Rules of implementation of investment portfolio management, approved by the resolution of Board of National Bank of Republic of Kazakhstan dated February 3, 2014 No. 10 and stipulated in the Investment Declaration WHIP.
Under the Pension Provision Act, PIPS are entitled to charge investment management fees. The maximum amount of remuneration for the UIP may not exceed 7.5% of the investment income received. The actual amount of the commission fee will be approved annually by the management body of the PPI and may change no more than once a year.
After the initial transfer of pension assets to the trust management of the UIP, the depositor has the right to:
- no more than once a year to submit an application to the UAPF for the transfer of their pension savings in trust management from one UIP to another UIP;
- to submit to the SAPF an application for a refund of pension savings held in trust WHIP, in trust National Bank (not earlier than two years after the initial transfer of pension savings in trust WHIP).
10 calendar days before the depositor reaches the retirement age, the depositor's pension savings are returned to the investment management of the National Bank.
During the period when pension savings are managed by the National Bank until the depositor reaches retirement age, the guarantee of the safety of pension savings, taking into account the level of inflation, is valid. When transferring pension savings to the management of the UIP, the guarantee of the state is replaced by the guarantee of the management company to ensure a minimum level of return on pension assets. The minimum level of return will be calculated from the weighted average return on pension assets transferred to the management of the PPI operating in the market. Information on the minimum return and weighted average return on pension assets will be published monthly.