According to the Law on Pension Provision, a one-time pension payment is the amount of pension savings formed at the expense of mandatory pension contributions and (or) mandatory professional pension contributions, withdrawn by the depositor (recipient) from the UAPF in order to improve housing conditions and (or) pay for treatment.
Pension savings – the money of the depositor (the recipient of pension payments), recorded in his individual pension account in the UAPF, including pension contributions, investment income, penalties and other income.
Pension contributions received on the individual pension account of the depositor are not subject to individual income tax (IIT). Pension savings are taxable when paid out.
In order to determine the procedure for taxation of the amounts of lump-sum pension payments, the Tax Code has been supplemented with Article 351-1 "Peculiarities of calculating, withholding and paying individual income tax on a lump-sum pension payment in accordance with the legislation of the Republic of Kazakhstan on pension provision".
According to the Tax Code, the UAPF, as a tax agent, calculates the PPI when transferring a one-time pension payment calculated in accordance with the Law on Pension Provision to the bank account of the recipient and (or) the authorized operator. The PII is calculated by applying the rates established by Article 320 of the Tax Code (10%) to the amount of a one-time pension payment.
The UAPF deducts and transfers the amount of the PII to the state budget in accordance with paragraph 2 of Article 351-1 of the Tax Code in one of the following two ways, chosen by the depositor:
1) at a time, no later than the day of making a one-time pension payment in accordance with the procedure provided for in Article 351 of the Tax Code;
2) monthly in equal shares for no more than sixteen years upon retirement (according to the schedule established by the UAPF for pension payments).
The decision of the depositor to choose the method of payment of the IPN must be reflected in his application submitted to the authorized operator.
When a depositor submits an application for a one-time deduction of the PPI, the UAPF will deduct the PPI immediately from the amount of the one-time pension payment when making a one-time pension payment.
Example:
amount of pension savings for IPS saver = 8 500 000 tenge
the minimum threshold for adequacy of pension savings = 3 500 000 tenge
the amount available for lump-sum pension payment = 8 500 000 - 3 500 000 = 5 000 000 KZT
accrued income in the form of lump-sum pension payments = 5 000 000 KZT
the amount of IIT retention and transfer to the budget = 5 000 000*10%= 500 000 KZT
amount of income in the form of lump-sum pension payments, net of pit withheld at source of payment = 5 000 000 – 500 000 = 4 500 000 tenge.
When a depositor submits an application to withhold the PPI on a monthly basis in equal shares, the UAPF will calculate the amount of the PPI without withholding and transferring it to the state budget when making a one-time pension payment. The deduction and transfer of the calculated PPI will be carried out when an individual reaches the retirement age in equal shares for no more than sixteen years according to the schedule established by the UAPF for pension payments.
Example:
the amount of pension savings on the depositor's IPS = 8,500,000 tenge
the threshold of the minimum sufficiency of pension savings = 3,500,000 tenge
accrued income in the form of a one-time pension payment = 5,000,000 tenge the
amount of the calculated PII = 5 000 000 * 10%= 500 000
the amount of income in the form of a one-time pension payment without withholding the PPI at the source of payment = 5,000,000 tenge.
If the depositor decides to choose the first method - to pay the IPN immediately in full, then he must indicate in the application the amount requested for withdrawal, minus the IPN in the amount of 10%. If the depositor decides to choose the second method – to use the deferred payment of the IPN, then he must specify in the application the amount requested for withdrawal, without deducting the IPN.
Both amounts are already indicated in the statement provided by the UAPF to the depositor, for his convenience and independent choice. The amount specified by the depositor, requested for withdrawal, will be transferred from the UAPF to its special account opened with an authorized operator.