1) Good afternoon! Now the situation in the world is difficult, the dollar and the euro are jumping literally every day, and we, the UAPF contributors, are worried about our pension savings. Tell me how this whole situation can affect our money?
The pension savings of each UAPF contributor and beneficiary are made up of contributions received to an individual pension saving account and accrued investment income. The latter consists of income in the form of remuneration on securities (deposits and other transactions), income in the form of market and currency revaluation of financial instruments, income on assets under external management, etc.
To date, UAPF pension assets can be managed by the National Bank of the Republic of Kazakhstan and investment portfolio managers (IPMs). In order to receive investment income, they place pension assets in Kazakhstan and abroad in various financial instruments in various sectors of the economy, in different currencies. Diversification ensures the safety and sustainable profitability of retirement savings. In addition, pension savings are invested in financial instruments in different currencies. As of March 1, 2022, 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.
Note that the income from market and currency revaluation can be both positive and negative in a particular period. Therefore, as a result of investment activities, due to the volatility of foreign exchange rates and changes in the market value of financial instruments, the amount of accrued investment income may vary.
It is important to emphasize that pension savings are long-term investments and it is advisable to analyze the amount of investment income for a period of at least one year. Short-term data (weekly, monthly, etc.) are not indicative, because dependent on ongoing changes in market conditions. For example, the amount of net investment income for 2021, distributed to the IPSA of contributors (beneficiaries), amounted to about KZT 1.4 trillion, which exceeded the amount of contributions received during the year (KZT 1.3 trillion). The return on UAPF pension assets in 2021 managed by the National Bank of Kazakhstan since the beginning of the year amounted to 11.13% (which is higher than the return on term bank deposits), with inflation of 8.4%.
In any case, you should not worry about the safety of your savings. In accordance with the Law on Pension Provision of the Republic of Kazakhstan, the state provides a guarantee of the safety of pension savings, taking into account inflation at the time of obtaining the right to pension benefit payments. This norm, which has no analogues anywhere in the world, contributes to the preservation of contributors' savings from inflation. When transferring pension savings to the management of the IPM, the guarantee of the state is replaced by the guarantee of the management company to ensure the minimum level of return on pension assets.
It is important to emphasize that the entire system of investment management and accounting for pension assets is transparent: each contributor has the opportunity to see his investment income in his personal account on the enpf.kz website or in the mobile application 24/7. Note that the revaluation of pension assets is carried out weekly and on the last day of each month.
Information on the investment management of UAPF pension assets and on financial instruments in which UAPF pension assets are placed is published on the official website of UAPF (www.enpf.kz) in the section "Indicators / Investment activity".
2) Good day! At the moment I have financial problems, and I cannot pay my consumer loan, can I withdraw my pension savings to pay it?
The rights of individuals to pension assets in accordance with the provisions of Article 50 of the Law of the Republic of Kazakhstan On Pension Provision in the Republic of Kazakhstan belong to the category of real rights provided for by the Law, and can be used exclusively for the purposes specified by the Law, including for making pension benefit payments, lump sum pension benefit payments in order to improve housing conditions and (or) pay for medical treatment in accordance with the legislation of the Republic of Kazakhstan.
The assignment of pension assets to the category of real rights means that the contributor (beneficiary), owning pension savings, cannot use and dispose of them until certain conditions stipulated by law occur.
According to paragraph 1 of Article 30 of the Law, pension benefits from the UAPF are paid from pension savings formed from the compulsory pension contributions (CPC), in the form of monthly pension payments according to the established schedule and (or) insurance payments from an insurance company in accordance with the pension annuity agreement at the expense of pension savings, as well as in the form of lump-sum pension benefits in order to improve housing conditions and (or) pay for medical treatment to persons specified in paragraph 1-1 of Article 31 of the Law.
The list of persons entitled to:
1) those who have reached retirement age in accordance with paragraph 1 of Article 11 of the Law, including women upon reaching from January 1, 2022 - 60.5 years, from January 1, 2023 - 61 years, from January 1, 2024 - 61.5 years, from January 1, 2025 - 62 years, from January 1, 2026 - 62.5 years, from January 1, 2027 - 63 years;
2) upon reaching the age of 45 by the contributor, with sufficient pension savings to conclude a pension annuity agreement to ensure payment of at least 70 percent of the subsistence minimum established by the law on the republican budget and effective as of January 1 of the corresponding financial year, in accordance with paragraph 1 of Article 59 Law;
3) disabled people of the first and second groups, if the disability is established indefinitely;
4) foreigners and stateless persons who left for a permanent place of residence outside the Republic of Kazakhstan, who submitted documents, determined by the legislation of the Republic of Kazakhstan, confirming the fact of departure;
if the amount of pension savings at the expense of the CPC, available on the individual pension account of the contributor, exceeds the threshold for the minimum adequacy of pension savings;
if the amount of the pension, and for retired judges, the amount of the pension and monthly allowance ensures the replacement rate of thebeneficiary's average monthly income at a level of at least 40 percent, determined in the manner determined by the Government of the Republic of Kazakhstan. When calculating the average monthly income replacement rate, the recipient's income preceding the retirement date, but not more than the average monthly income in the republic, is taken into account;
if the contributor has entered into a pension annuity agreement with an insurance company.
Based on the foregoing, we notify that UAPF is entitled to make pension benefits only in the above cases provided for by the legislation of the Republic of Kazakhstan.
Given the above, the legislation of the Republic of Kazakhstan does not provide for the use of pension savings to pay for consumer loans.
3) Hello! At the moment I am divorced, but my ex-husband's relatives want to know the amount of my pension savings and put pressure on me to withdraw my savings. Tell me, can anyone except me get my IPSA statement from the UAPF?
Don't worry. In accordance with Article 57 of the Law of the Republic of Kazakhstan On Pension Provision in the Republic of Kazakhstan, the secret of pension savings, which is guaranteed by the UAPF, includes information about the balances and the movement of money on individual pension accounts of contributors (beneficiaries), may be disclosed to a contributor carrying out pension contributions, to the recipient, to any third party on the basis of the written consent of the contributor (beneficiary), drawn up in accordance with the requirements of the legislation of the Republic of Kazakhstan.
Thus, a statement from the IPSA can be provided by the UAPF only to you or to an attorney to whom you will issue a notarized Power of Attorney.
4) Three years ago I became a citizen of the Republic of Kazakhstan, previously lived in Bishkek and had a work experience in the Republic of Kyrgyzstan. Not so long ago I read the news about the Agreement on Pension Provision for Workers of the EAEU Countries and would like to understand whether I will receive pension benefits for the length of service in my native country upon retirement or not?
In accordance with paragraph 3 of Article 98 of the Treaty on the Eurasian Economic Union dated May 29, 2014 pension provision for workers of the EAEU member states and family members is regulated by the legislation of the state of permanent residence, as well as in accordance with a separate international agreement between the EAEU member states.
Such an international treaty is the Agreement on Pension Provision for Workers of the Member States of the Eurasian Economic Union - the Republic of Armenia, the Republic of Belarus, the Russian Federation, the Republic of Kazakhstan and the Kyrgyz Republic, which entered into force on 01.01.2021.
The main purpose of the Agreement is to form the pension rights of workers of the EAEU Member States on the same conditions and in the same manner as citizens of the state of employment, that is, each EAEU Member State must guarantee citizens of other EAEU Member States the scope of rights to pensions equal to scope of rights granted to its citizens under similar conditions.
It should be noted that Article 12 of the Agreement, which contains transitional provisions, provides that the appointment and payment of pensions are carried out in the following order:
for the length of service acquired after the entry into force of the Agreement, a pension is assigned and paid by the EAEU Member State in whose territory the relevant length of service was acquired;
for the length of service acquired before the entry into force of the Agreement, a pension is assigned and paid in accordance with the legislation of the EAEU Member States and the Agreement on Guarantees of the Rights of Citizens of the States Members of the Commonwealth of Independent States in the field of pension provision dated March 13, 1992.
Consequently, the norms of the Agreement apply only to the length of service acquired by the worker in the period after the entry into force of the Agreement (from January 01, 2021), subject to official employment, with the conclusion of an employment or civil law contract, with the compulsory payment of insurance (pension) contributions to the pension system of the state of employment.
5) Is it true that, for example, my neighbor withdrew pension savings for housing, but I, for example, did not, then we will still have the same pension in the future?
Our country has a multi-level pension system. The Law On Pension Provision in the Republic of Kazakhstan provides for the receipt of pensions from several sources. These are payments from the state budget – basic and solidarity (PAYG) pensions, as well as accumulative pensions.
A pension from the state budget is not an additional bonus from the state, but payments established by law for each citizen, taking into account his seniority.
The state basic pension benefit payment is provided in the amount of 54 percent of the subsistence minimum (PM) established for the corresponding financial year by the law on the republican budget, with an increase in its size for each full year of participation in the pension system over ten years by 2 percent, but not more 100 percent of the amount of the PM established for the corresponding financial year by the law on the republican budget
In this case, the solidarity (PAYG) payment is assigned to persons who have at least six months of work experience as of January 1, 1998, and is carried out in proportion to the length of service.
The accumulative pension in Kazakhstan has been introduced since 1998 and consists in the fact that each citizen makes contributions to his individual pension saving account in the UAPF during his working life and then receives pension benefits from it.
Thus, the size of pension benefits by age from the UAPF depends on the amount of pension savings at the time of pension benefits, and this, in turn, depends on the size of pension contributions, the regularity of their transfer, and investment activities. At the same time, pension payments are established from the date of application and are made until the pension savings are exhausted. Information about your pension savings can be obtained 24/7 in your personal account on the website and in the UAPF or e-government mobile application.
Accordingly, the size of the pension will depend on the length of service and, to a large extent, on the amount of savings in the individual pension saving account, which, of course, will decrease if pension savings are withdrawn. A forecast calculation of a future pension can be made using the pension calculator on the enpf.kz website and see how early withdrawal can affect the size of pension benefits.