How did UAPF contributors manage to increase their pension savings to 13.1 trillion tenge in five years?
At the end of last year 2021, the Unified Accumulative Pension Fund on its corporate website enpf.kz published an updated Corporate Development Strategy for 2022-2026, approved by a decision of the Board of Directors. The previous Corporate Strategy was approved in 2017. It laid down the goals and objectives of the UAPF for the period up to 2021, which were fulfilled. Today in our material we will dwell in more detail on the work done by the Foundation over the past five years. Of course, it is impossible to present them in a small material, but we tried to collect highlights of the past years.
Over the five years of the development strategy, the volume of pension savings increased by 5.3 trillion tenge or 68%, amounting to 13.1 trillion tenge (16.1% of GDP) as of January 1, 2022. Thus, the average annual growth of pension savings over this period outstrips GDP growth. There is an increase in both pension savings themselves and pension contributions, investment income, pension payments, etc.
Average annual return on pension assets for 2017-2021 amounted to 9.6% with an average annual inflation of 6.7%. The indicator of cumulative profitability since the introduction of the funded pension system (FPS) as of January 1, 2022 exceeded the level of cumulative inflation by 1.2 times (681.13% and 546.77%, respectively).
During the period from 2017 to 2021, the number of participants in the funded pension system (unique contributors and recipients of the MPC) increased by 1.9 million people, or 20.9%, and amounted to 10.9 million people. The total number of individual pension accounts (IPA) for all types of contributions as of January 1, 2022 amounted to 11.5 million units. The average annual growth rate of IPA for the period was 4%.
By the way, in 2021, the number of active participants in the FPS (whose IPA received at least one MPC during the year) amounted to 7 million people or 79.5% of the employed population, which, according to the Bureau of National Statistics of the Agency for Strategic Planning and Reforms The Republic of Kazakhstan is 8.8 million people.
All individual retirement accounts are opened automatically. Since January 2019, on an unannounced basis, upon receipt of the first installment, accounts for mandatory pension contributions are opened, in the past 2021, work was carried out to transfer the function of opening the IPA to an automatic format to account for voluntary and mandatory professional pension contributions. Successfully passed the certification audit of the information technology service management system and the re-certification audit of the quality management system, etc.
Particularly noteworthy are the indicators on the level of knowledge and trust in the UAPF. In particular, the indicator "the share of respondents who gave correct answers to the questions asked about the pension system of Kazakhstan and about the services of the UAPF" with a target value of 63.5%, amounted to 69.9%. The indicator is measured by answers to basic questions, while the sociological survey contained both basic questions (basic level) and complex questions (advanced level). In addition, the index of public confidence in the UAPF was 79% (with a target of 74%).
The Fund also carried out work on the implementation of the legislation of the Republic of Kazakhstan. For example, since 2018, persons who have reached retirement age can apply on a one-stop basis only to the Public Service Center (PSC); the benefits of voluntary pension contributions in taxation and the possibilities of use have been expanded. In 2021, the Agreement on Pension Provision for Workers of the Member States of the Eurasian Economic Union dated December 20, 2019 came into force. 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, etc.
It should be noted that the implementation of the UAPF Development Strategy over the previous five years is only one of the stages in providing UAPF contributors (beneficiaries) not only with quality services, but also with decent payments.