I heard that from 2022 new sufficiency thresholds for withdrawing pension savings will be taken into account. If so, what is the reason for this?
The Law "On Pension Provision in the Republic of Kazakhstan" defines that "the threshold of minimum adequacy of pension savings is the minimum amount of pension savings formed from mandatory pension contributions and (or) mandatory professional pension contributions necessary to ensure a monthly pension not lower than the minimum pension established by the law on the republican budget and effective as of January 1 of the corresponding financial year, determined in accordance with the Methodology approved by the Government of the Republic of Kazakhstan".
The methodology for determining the minimum sufficiency threshold (MST) was approved by the Decree of the Government of the Republic of Kazakhstan dated January 6, 2021. This Methodology is an open regulatory legal act and is freely available on the Internet, including on the UAPF website. In the Methodology, the algorithm for calculating the MST is described in great detail.
When calculating the MST, such social indicators as the minimum wage (MW), minimum pension (MP), minimum basic pension (MBP) are used, which are indexed annually in accordance with the Law of the Republic of Kazakhstan "On the Republican Budget". In this regard, the size of the MST will change annually with an increase in these indicators.
On December 2, 2021, the Law of the Republic of Kazakhstan on "On the Republican Budget for 2022-2024" was signed, which provides for an increase in a number of socio-economic indicators from January 1, 2022. The minimum wage will be increased from the current 42.5 thousand tenge to 60 thousand tenge. Also, the sizes of the MP, MBP have been increased and other parameters that are used in the calculation of the Methodology have been taken into account.
According to this Methodology, the MST for each age is calculated in such a way that by reaching the retirement age, the future monthly minimum pension payment from the UAPF will be the largest value between the MP (43,272 tenge in 2021; 46,302 tenge in 2022) and the minimum wage (42,500 tenge in 2021, 60,000 tenge in 2022), minus the MBP (18,523 tenge in 2021, 19,450 tenge in 2022).
In 2022, the amount of the monthly MW is higher than the size of the MP, respectively, the MW indicator was used in the calculation of the MST. As a result, the size of the future minimum payment from the UAPF increased and amounted to 60,000 (MW) - 19,450 (MBP) = 40,550 tenge, compared with the previous figure of 43,272 - 18,524 = 24,748 tenge. As you can see, the size of the future minimum payment from the UAPF increases by 64%.
The increase in the size of future pension payments from the UAPF is in line with the main task - to provide citizens with adequate retirement income when they reach retirement age. Approximately by this figure (64%), the MST for people of pre-retirement and retirement age (58-62 years) increases. The younger the age of the contributor, the higher the percentage of change in the MST, since the period for receiving pension payments is longer, future payments are indexed, respectively, the thresholds are changed according to the formula for calculating a higher percentage.
Recall that on behalf of President K. Tokayev to the Government of the Republic of Kazakhstan, in order to support citizens who did not have time to use their savings, the deadline for introducing new thresholds for the minimum adequacy of pension savings has been postponed until April 1, 2022.