The net investment income provided by the National Bank since the merger of all pension assets into the UAPF amounted to 6.2 trillion tenge
The amount of pension savings of depositors of the Unified Accumulative Pension Fund as of May 1, 2022 is about 13.0 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 the merger of all pension assets into the UAPF amounted to 6.2 trillion tenge.
From January 1 to May 1, 2022, net investment income amounted to about 128.7 billion 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 has affected both the growth of inflation and the profitability of pension assets.
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 rate, it may grow. In general, it is worth emphasizing that since 2014, the currency share of pension assets has increased from 17% to 32%.
From January to the beginning of March 2022, the tenge exchange rate weakened against the US dollar from 431 tenge to 495 tenge and up 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 May 1, it was 448.49 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 8.00%.
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 was 11.13%, with inflation of 8.4%.
Note that the average annual yield of pension assets for five years is 9.5% with inflation of 6.7%, for three years – 9.5% with inflation of 7.1%.
The investment yield since the foundation of the accumulative pension system (1998) on May 1, 2022, with an increasing total, amounted to 688.00% with inflation for the entire period of 593.98%. Thus, the real (i.e. exceeding inflation) return on pension assets for the period from the beginning of the accumulative pension system on May 1, 2022 amounted to 94.02%.
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".
The UAPF was established on August 22, 2013 on the basis of JSC "NPF "GNPF". The founder and shareholder of the UAPF is the Government of the Republic of Kazakhstan represented by the State Property and Privatization Committee of the Ministry of Finance of the Republic of Kazakhstan. The trust management of pension assets of the UAPF is carried out by the National Bank of the Republic of Kazakhstan. Since January 1, 2016, the functions of developing proposals to improve the efficiency of pension assets management have been transferred to the National Fund Management Council. In accordance with the pension legislation, the UAPF attracts mandatory pension contributions, mandatory occupational pension contributions, voluntary pension contributions, pension payments, individual accounting of pension savings and payments, provides the depositor (recipient) with information on the status of his pension savings (more on www.enpf.kz ).