This year, the net investment income of UAPF contributors exceeded 654 billion tenge
The amount of pension savings of the contributors of the Unified Accumulative Pension Fund as of June 1, 2021 exceeded 12.7 trillion tenge. As you know, this amount includes pension contributions and investment income.
It is important to note that in just five months from January 1 to June 1, 2021, net investment income in the amount of 654.2 billion tenge was credited to the accounts of UAPF depositors, which is 155 billion tenge or 31% more than in the five months of last year. Yield on UAPF pension assets managed by the National Bank of the Republic of Kazakhstan since the beginning of the year amounted to 5.3%, with inflation of 3.5%. At the same time, the yield for the last 12 months was 11.7%, with inflation over the same period of 7.2%.
Let us recall that the amount of pension savings of contributors (recipients) is recalculated and revalued weekly in accordance with the results of investing pension assets. Investment income includes income in the form of interest on securities (deposits and other transactions), income in the form of market revaluation of financial instruments, income in the form of currency revaluation, income on assets under external management, etc.
In general, the investment income provided by the National Bank since the merger of all pension assets into the UAPF amounted to over 5.3 trillion tenge. As of June 1, 2021, the share of net investment income in total pension savings is 36.1%.
If we take the period from the date of foundation of the most accumulative pension system of Kazakhstan in 1998, then the net investment income exceeded 6.2 trillion tenge. Investment profitability during this time with a cumulative total amounted to 640.01%. At the same time, inflation amounted to 517.53%. Thus, the real return on pension assets for the period from the start of the funded pension system until June 1, 2021 amounted to 122.48%.
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 subject to constant changes in market conditions.
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 a mobile application. Information on the investment management of UAPF pension assets and on financial instruments in which UAPF pension assets are placed is published on the UAPF official website (www.enpf.kz) in the “Indicators/Investment Activity” section.
In addition to the National Bank, UAPF depositors can transfer part of their savings to Investment Portfolio Managers (IPMs). At the moment, the UAPF has concluded an agreement on trust management of pension assets with four IPMs. You can get acquainted with information about them and study their investment declarations on the website enpf.kz in the section "Services" - "Register of Investment Portfolio Managers".
Recall that after receiving pension assets from the UAPF, the IPM invests them in permitted financial instruments specified in the Rules for the implementation of investment portfolio management activities, approved by the Resolution of the Board of the National Bank of the Republic of Kazakhstan dated February 3, 2014 No. 10, and provided for in the Investment Declaration of the IPM.
Under the Pensions Law, IPMs are entitled to charge an investment management fee. The maximum amount of remuneration of the IPM cannot exceed 7.5% of the received investment income. The actual amount of the commission is annually approved by the governing body of the IPM and may change no more than once a year.
During the period when pension savings are under the management of the National Bank until the depositor reaches retirement age, there is a guarantee of the safety of pension savings, taking into account the level of 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 profitability of pension assets. The minimum level of return is calculated on the basis of the weighted average return on pension assets transferred to the management of an IPM operating on the market.
It should be noted that the pension assets held in trust by Jýsan Invest JSC showed a profitability from the beginning of activity (which is March 15, 2021) at the level of 4.7%. The yield on pension assets held in trust by Halyk Global Markets JSC for the same period was 1.6%; BCC Invest JSC 2.3%. At the same time, inflation for the period amounted to 3.5%. Centras Securities JSC has been managing pension assets since April 1, 2021, during which time the investment return was 2.5%, with inflation of 3.5%.