Choose your method of receiving pension payments

The pension system in Kazakhstan offers contributors (recipients) increasingly more opportunities to participate in planning their retirement capital and their financial security after retirement. A competitive asset management environment is emerging, with the ability to transfer assets to investment portfolio managers (IPMs) and choose from various investment strategies. Provided pension savings are sufficient, they can be used to improve housing conditions or medical treatment before reaching retirement age. The most forward-thinking contributors (recipients) are adding voluntary contributions in addition to mandatory ones when planning their future pension.

Today, contributors (recipients) to the UAPF can choose different payment sources thanks to an alternative pension provision—a pension annuity—offered by insurance companies. A pension annuity is a financial insurance instrument that allows UAPF contributors to receive their pensions earlier than expected, provided their pension savings are sufficient. Along with pension payments from the UAPF, it is intended to cover needs after retirement, when other sources of income may be unavailable.

The adequacy of pension savings is determined by the terms of the pension annuity agreement with the insurance company, which we recommend carefully reviewing when deciding whether to transfer pension savings. When entering into a pension annuity agreement with an insurance company, pension savings are transferred from the UAPF to the selected company in accordance with the procedure established by law.

To improve the accessibility of pension annuities, legislative amendments were introduced in February 2023, increasing the minimum indexation rate from 5% to 7% and the maximum rate of return from 6% to 9%. The new amendments also take into account the average life expectancy of individuals with disabilities and those working in hazardous and dangerous conditions.

Furthermore, it is possible to take advantage of a so-called "deferred" pension annuity from age 45, but payments under this type of annuity can be received from age 55. Individuals with at least five years of work experience in hazardous conditions can purchase such annuities starting at age 40, with payments starting at age 50.

Since 2022, another pension provision tool has been available: a joint (or family) annuity. A joint pension annuity for married couples and close relatives is an insurance product that allows them to pool their savings and receive lifetime payments without waiting for official retirement. For example, married couples can use it if one spouse has insufficient pension savings to purchase a pension annuity, while the other has a surplus.

It should be noted that if a contributor has transferred all pension savings from the ENPF to an insurance company and no further pension contributions are made to the UAPF, no payments from the Fund will be made upon reaching retirement age. Kazakhstanis with a surplus in their UAPF account will be able to receive both insurance payments from the insurer and a pension from the UAPF in the future.

Annuity features:

It is possible to receive pension payments before the official retirement age;
Payments are made for life, even if their amount exceeds the amount of savings transferred to the insurance company;
The pension is indexed annually by 7%;
When purchasing a pension annuity, the recipient of insurance payments transfers ownership of their savings to the insurance company, meaning they cannot use them for other needs, withdraw them when moving to another country for permanent residence, and in the event of their death, their savings cannot be inherited by relatives. However, the pension annuity agreement can stipulate a guaranteed pension payment period, during which certain payments will be transferred first to the recipient and, in the event of their death, to their heirs. Thus, upon the death of the pension recipient, monthly payments will be made to their heirs until the end of the guaranteed period. However, the minimum amount for a pension annuity in this case will be higher.
The payment amounts are clearly defined and known in advance.

Before deciding to transfer pension savings to an insurance company, we recommend carefully analyzing both proposed methods of receiving a pension: from the UAPF and through a pension annuity.

You can use the calculator on the UAPF website to calculate your expected future pension from the Fund, as well as, for comparison, the possible insurance payment from the insurance company under the pension annuity agreement.

Since November 2022, Kazakhstani citizens have the right to a partial refund from the insurance company back to the UAPF. Persons who have entered into a pension annuity agreement are entitled to a refund no earlier than two years.