1) Hello! Can you explain with an example how a person with savings of about 5 million tenge will receive a pension benefit?
The amount of the monthly pension benefit from the Unified Accumulative Pension Fund is determined as one twelfth of the annual amount of pension benefits calculated in accordance with the Methodology for calculating the amount of pension benefits approved by the Decree of the Government of the Republic of Kazakhstan dated 02.10.2013 No. 1042.
We remind you that from April 1, 2021, changes to the Methodology came into force, according to which the annual amount of pension payments in the first year of pension benefits is calculated as the product of the amount of pension savings and the pension savings payment rate - 6.5% (the amount of pension savings * 6, 5% / 12 = monthly benefit in the first year).
In subsequent years, the amount of the monthly pension benefit is recalculated by annually increasing the amount of the monthly pension benefit for the previous year by the indexation rate of pension benefits - 5%.
Let’s see and example:
Amount of PA = 5,000,000 tenge
The annual amount of pension benefits in the first year: 5,000,000 * 6.5% = 325,000 tenge;
The amount of the monthly pension benefit in the first year: 325,000/12 months. = 27,083.33 tenge;
The amount of the monthly pension benefit for the second year: 27,083.33+5% = 28,437.50 tenge.
For beneficiaries of certain categories: people with disabilities of groups 1 or 2, established indefinitely, as well as people who worked in hazardous industries, whose savings were formed at the expense of compulsory occupational pension contributions in the aggregate for at least sixty months, the new Methodology for calculating pension benefits provides for correction multiplying factors.
In this case, for persons who meet more than one of the above conditions, the correction factor with the largest value is applied.
It should be added that the monthly pension benefit from the UAPF is paid in the amount of at least 70 percent of the subsistence minimum established for the corresponding financial year by the law on the republican budget (For example, in 2022 this amount is 25,212.6 tenge = 70% * 36018).
If the amount of pension savings as of the date of application does not exceed twelve times the minimum pension established by the law on the republican budget for the corresponding financial year, this amount is paid to the beneficiary from the UAPF in a lump sum (in 2022, 555,624 tenge = 12 * 46,302).
In addition, if the balance of pension savings on the IPSA after the next monthly benefit is less than 70% of the subsistence minimum established for the corresponding financial year by the law on the republican budget, this balance is paid along with the amount of the next payment.
Recall that in addition to the pension benefit from the UAPF, the pensioner is entitled to benefits from the state budget in the form of a basic and PAYG pension.
The basic pension is paid to all persons who have reached retirement age. Its size depends on the seniority of the person retiring.
PAYG or solidarity pension is paid if there is at least 6 months of work experience, worked out as of January 1, 1998.
For appointment and benefit payments from the state budget and the UAPF in connection with reaching the retirement age, beneficiaries must timely contact the departments of the Government for Citizens State Corporation (PSC) at the place of residence.
2) Good day! I read that last year the Pension Agreement came into force for citizens of the EAEU countries. However, I am a citizen of Tajikistan and our country is not a member of the EAEU. I work in sales in Almaty. I would like to know if I have the right to participate in the pension system of Kazakhstan and whether my employer has to pay pension contributions for me?
In accordance with Article 2 of the Law On Pension Provision in the Republic of Kazakhstan, foreigners and stateless persons permanently residing in the territory of the Republic of Kazakhstan enjoy the right to pension provision on an equal basis with citizens of the Republic of Kazakhstan, unless otherwise provided by laws and international treaties.
Foreigners who have received a permanent residence permit in the Republic of Kazakhstan in the manner determined by the Ministry of Internal Affairs of the Republic of Kazakhstan are recognized as permanent residents in the Republic of Kazakhstan.
Thus, according to the Law of the Republic of Kazakhstan On Identity Documents, a document proving the identity of a foreigner in the territory of the Republic of Kazakhstan and confirming that he/she has received a permit for permanent residence in the Republic of Kazakhstan is a residence permit for a foreigner in the Republic of Kazakhstan (the permit).
Thus, only those foreigners who permanently reside in the territory of the Republic of Kazakhstan on the basis of a residence permit are entitled to pensions in the Republic of Kazakhstan.
We remind you that individual pension saving accounts (IPSA) in the UAPF are opened automatically on a no-statement basis:
- for accounting for compulsory pension contributions (CPC) - from January 8, 2019;
- for accounting for voluntary pension contributions (VPC) - from May 1, 2021;
- for accounting for compulsory occupational pension contributions (COPC) - from October 26, 2021.
At the same time, the identification of an individual in whose favor pension contributions are transferred is carried out according to his personal data (full name, IIN, date of birth) indicated in the electronic format of the payment order when transferring CPC, COPC and VPC, and all necessary information: about the details of the current document , certifying the identity of an individual, about the place of permanent residence, UAPF receives other information from the relevant information systems of state bodies.
3) I am 65 years old and now an active pensioner, but recently I again found a small part-time job and got a job as a security guard in one company. Now I have a question, will my employer transfer 10% of my salary to UAPF? 'Cause I'm already getting pension benefits from you.
In accordance with subparagraph 1) of paragraphs 2 and 3 of Article 24 of the Law of the Republic of Kazakhstan On Pension Provision in the Republic of Kazakhstan, individuals who have reached retirement age are exempt from paying compulsory pension contributions and compulsory occpational pension contributions to the UAPF in accordance with paragraph 1 of Article 11 of the Law of the Republic of Kazakhstan On pension provision in the Republic of Kazakhstan.
We remind you that the generally established retirement age for men is 63 years, for women in 2022 - 60.5 years with an annual increase of six months until reaching 63 years in 2027.
4) Tell me, is it true that pension benefits from the UAPF are taxed? What proportion of citizens can count on tax deductions?
The Tax Code of the Republic of Kazakhstan defines payments attributable to income in the form of pension benefits subject to taxation and the tax rate applicable to income in the form of pension benefits.
Thus, according to Article 326 of the Tax Code, income in the form of pension benefits subject to taxation includes benefits made by UAPF:
1) from pension savings of taxpayers formed from: compulsory pension contributions in accordance with the legislation of the Republic of Kazakhstan; compulsory occupational pension contributions in accordance with the legislation of the Republic of Kazakhstan;
voluntary pension contributions in accordance with the terms of the agreement on pension provision at the expense of voluntary pension contributions;
2) individuals-residents of the Republic of Kazakhstan who have reached retirement age and left for a permanent place of residence outside the Republic of Kazakhstan in accordance with the Law of the Republic of Kazakhstan On Pension Provision in the Republic of Kazakhstan;
3) to individuals-residents of the Republic of Kazakhstan who have not reached retirement age and have left for permanent residence outside the Republic of Kazakhstan in accordance with the Law of the Republic of Kazakhstan On Pension Provision in the Republic of Kazakhstan;
4) to individuals in the form of pension savings inherited in the manner prescribed by the legislation of the Republic of Kazakhstan;
5) to individuals in the form of a lump sum benefit payment for the burial of a deceased person who has pension savings, in the manner prescribed by the legislation of the Republic of Kazakhstan.
According to Article 320 of the Tax Code, the taxpayer's income, with the exception of income in the form of dividends, received from sources in the Republic of Kazakhstan, is taxed at a rate of 10 percent.
According to paragraph 3 of Article 353 of the Tax Code, the amount of taxable income in the form of pension benefits from the UAPF is determined in the following order:
the amount of income in the form of pension benefits subject to taxation,
minus
the amount of the adjustment for individual income tax, provided for in paragraph 1 of Article 341 of the Tax Code.
minus
the amount of tax deductions in the manner and amount specified in paragraph 1 of Article 345 and in subparagraphs 2) and (or) 3) of paragraph 1 of Article 346 of the Tax Code;
According to Article 345 of the Tax Code, taxable income in the form of pension benefits is subject to a tax deduction in the following amounts:
1) for payments provided for by subparagraph 1) of Article 326 of the Tax Code - in the amount of 14 times the monthly calculation index established by the law on the republican budget and effective on the date of accrual of income in the form of a pension benefit, for each month for which the pension benefit is paid;
2) for payments provided for by subparagraph 2) of Article 326 of the Tax Code - in the amount of 168 times the monthly calculation index established by the law on the republican budget and effective on the date of accrual of income in the form of a pension benefit.
The adjustment for individual income tax (hereinafter referred to as IIT) in accordance with subparagraph 18) of paragraph 1 of Article 341 of the Tax Code includes payments for burial, if there is a death certificate, within 94 times the amount of the minimum calculation indicator.
Also, in accordance with subparagraphs 2) and 3) of paragraph 1 of Article 346 of the Tax Code, standard tax deductions in the amount of 882 times the monthly calculation index for a calendar year are applied to the following recipients of pension benefits when determining the amount of taxable tax, based on the fact that the beneficiary on the date of payments from UAPF is:
- a participant in the Great Patriotic War and a person equated to them;
- a person awarded orders and medals of the former USSR for selfless work and impeccable military service in the rear during the Great Patriotic War;
- a person who worked (served) for at least six months from June 22, 1941 to May 9, 1945 and was not awarded orders and medals of the former USSR for selfless work and impeccable military service in the rear during the Great Patriotic War;
- a disabled person of I, II or III groups;
- a disabled child;
- one of the parents, guardians, trustees of a disabled child, - for each such disabled child until he/she reaches the age of eighteen;
- one of the parents, guardians, trustees of a person recognized as disabled due to "disabled since childhood" - for each such person during his life;
- one of the adoptive parents (adopters), - for each such person until the adopted (adopted) child reaches the age of eighteen;
- one of the adoptive parents who accepted orphans and children left without parental care into a foster family, - for each such person for the period of validity of the agreement on the transfer of orphans, children left without parental care to a foster family.
Article 351-1 of the Tax Code provides for the specifics of calculating, withholding and paying IIT from lump-sum pension benefits withdrawn by the contributor (beneficiary) from the UAPF in order to improve housing conditions and (or) pay for medical treatment, in the manner established by the Law on Pensions.
At the same time, the IIT is calculated by the UAPF by applying the rates established by Article 320 of the Tax Code (in the amount of 10%) to the amount of the lump sum pension benefit.
Withholding and transfer of IIT from the amounts of lump-sum pension benefits from the UAPF in accordance with paragraph 2 of Article 351-1 of the Tax Code are made by the UAPF in accordance with the application of an individual to withhold the IIT in one of the following ways:
1) at a time, no later than the day of making a lump-sum pension benefit in the manner prescribed by Article 351 of the Code;
2) monthly in equal installments for no more than sixteen years according to the schedule established by the UAPF for pension benefits.
IIT is withheld on the basis of an application for withholding IIT submitted by an individual to a tax agent represented by UAPF in the form established by the authorized body in agreement with the authorized body in the field of pension provision.
Please note that the following incomes of recipients of pension benefits are subject to PIT at a rate of 10 (ten) percent without tax deductions:
- benefits to individuals in the form of inherited pension savings, with the exception of persons specified in subparagraphs 2), 3) of paragraph 1 of Article 346 of the Tax Code;
- benefits to individuals who are non-residents of the Republic of Kazakhstan (subparagraph 3 of Article 655 of the Tax Code);
- lump-sum pension benefits withdrawn by the contributor (beneficiary) from the UAPF in order to improve housing conditions and (or) pay for medical treatment.
5) Good day! I am an individual entrepreneur and have a small business, please tell me how to transfer pension contributions for myself?
According to paragraph 4 of Article 25 of the Law of the Republic of Kazakhstan On Pension Provision of the Republic of Kazakhstan, for persons engaged in private practice, individual entrepreneurs, compulsory pension contributions in their favor, payable to the UAPF, are set at 10 percent of the income received, but not less than 10 percent from the minimum wage and not more than 10 percent of the 50-fold minimum wage established for the corresponding financial year by the law on the republican budget. Note that the income received is income determined independently by a person engaged in private practice, as well as an individual entrepreneur for calculating compulsory pension contributions to the UAPF in their favor. In the absence of income, individuals engaged in private practice, as well as individual entrepreneurs, have the right to pay compulsory pension contributions to the UAPF in their favor at the rate of 10 percent of the minimum wage established for the corresponding financial year by the law on the republican budget.
In accordance with paragraphs 8 and 13 of the Rules and terms for calculating, withholding (accrual) and transferring compulsory pension contributions, compulsory occupational pension contributions to the unified accumulative pension fund and penalties on them, approved by the Decree of the Government of the Republic of Kazakhstan dated October 18, 2013. No. 1116, the transfer of compulsory pension contributions is made by the agent through non-cash payments. Individuals engaged in private practice, individual entrepreneurs, as well as individuals who receive income under civil contracts, who do not have accounts with banks and organizations engaged in certain types of banking operations (hereinafter referred to as banks), pay compulsory pension contributions in cash to the bank for their subsequent transfer to the UAPF
Payment of compulsory pension contributions in cash or non-cash through banks is carried out in the manner determined by the Law of the Republic of Kazakhstan On payments and payment systems.
Persons engaged in private practice, individual entrepreneurs, as well as citizens of the Republic of Kazakhstan, specified in paragraph 2 of Article 39 of the Law of the Republic of Kazakhstan On Pension Provision of the Republic of Kazakhstan, when transferring (paying in cash) the amount of compulsory pension contributions in their favor and withheld from their income employees and individuals with whom civil contracts have been concluded, the subject of which is the provision of services (performance of work), indicate in the payment documents the details of the State Corporation, and in the lists attached to them, information about themselves, employees and individuals who have entered into a civil contract - legal nature (IIN, surnames, first names, patronymics (if any), dates of birth, amounts of contributions and the period (month / months, year) for which compulsory pension contributions are paid).