ANNOUNCEMENT
In connection with the epidemiological situation and the increase in the incidence of coronavirus infection (COVID-19), the next, fourteenth meeting of the Public Council at the UAPF was held in an online format.
The meeting of the Council was opened by its chairman Yevgeniy Seipulnik. He informed that Vasilina Atoyants, Aleksey Baiteev, Anna Vidyanova and Kuat Dombay left the Council of their own free will. Three new candidates were proposed: Adil Mamazhanov, General Director of the Expert RA Kazakhstan Rating Agency, Zhomart Nurabaev, Deputy Chairman of the Board of the ALMEX Holding Group Joint Stock Company, and independent economist Aidarkhan Kusainov. All three were adopted by unanimous decision to the Public Council.
Further, a detailed report on the activities of UAPF JSC as of June 1, 2020 was presented.
The total number of accounts in the UAPF reached 10.9 million, which exceeds the number of the employed population of 8.8 million. This is due to the fact that not only working citizens who make pension contributions, but also recipients who have already retired, servicemen transferred to state pensions, as well as other citizens who do not belong to the category of the employed population, have savings in the UAPF.
Pension savings as of June 1, 2020 amounted to 11.7 trillion tenge. The increase since the beginning of 2020 was due to the receipt of contributions (428 billion tenge) and due to net investment income (499 billion tenge).
About 70% of depositors have savings up to 1 million tenge and 91% have savings up to 3 million tenge. This is due to the short experience of participation in the funded pension system: 53% of contributors have experience of regular transfer of contributions up to 5 years and 75% - up to 10 years. At the same time, the average savings of depositors with more than 20 years of experience in making contributions amounted to 4.9 million tenge, including 5.5 million tenge among men and 4.1 million tenge among women.
The level of savings also reflects the level of labor income of the population from which contributions are transferred: in 2019, 53% of contributors paid contributions from incomes up to 4 living wages (LM) (1 LM in 2019 was 29,698 tenge). Investors with incomes below the average also have lower regularity of contributions. At the same time, the average regularity of payment of contributions by all contributors is about 8.13 contributions per year.
The largest increase in the opening of individual retirement accounts (IPA) fell on April 2020. In this month, 954,952 new accounts were opened, including 941,425 accounts were opened by payers of the Single Aggregate Payment (hereinafter - UTP) for the first time. In April 2020, 2.98 million CAP payers made about 3.02 million CAP contributions totaling 1.7 billion tenge. At the same time, 56% of the CAP payers were residents of rural areas, and 44% of payers were residents of urban areas.
The number of active depositors is growing every year. In 2019, the number of depositors who replenished their pension account amounted to over 6.5 million people. Of these, 66% replenish accounts 9-12 times a year, 22% 1-5 times a year, 12% 6-8 times a year.
In general, the funded pension system is a "mirror" of the economic situation and the development of the labor market in the country.
It also provides information on the ongoing work to reduce commissions and optimize the UAPF's expenses. The size of UAPF commissions is determined annually by the Board of the National Bank. For 2020, the size of the commission was significantly reduced from 5% to 2% of investment income and from 0.015% to 0.011% per month from pension assets. In recent years, the expenses of the UAPF have been reduced by more than 1 billion tenge due to staff reduction (by more than 25%), optimization and automation of business processes, digitalization of services. This work will be actively continued in 2020. Also, the UAPF made proposals for the legislative regulation of commission issues, taking into account international practice. When implemented, the income and expenses of the UAPF will significantly decrease in the interests of depositors.
Nurzhan Nurgazin, Deputy Director of the Monetary Operations Department of the National Bank, presented information on investment income on pension assets for the first half of 2020. Since the beginning of the year (including June), the total investment income of depositors amounted to about 566 billion tenge, of which 66% (390 billion tenge) - in the form of remuneration on financial instruments.
Over the past period since the completion of the consolidation of all pension assets in the UAPF (April 2014), pension assets increased from 4.0 trillion tenge to 11.8 trillion tenge, the foreign exchange share of pension assets increased from 17.4% to 33.0%, the share foreign assets increased from 6.1% to 23.1%.
Since about a third of the assets consist of investments in foreign currencies (mainly in US dollars), significant foreign exchange gains were generated in March 2020. Despite the subsequent decrease in income in April and May due to the strengthening of the tenge, a stable positive yield has been provided since the beginning of 2020. It was emphasized that pension assets are long-term investments,