Investment portfolio of pension assets managed by the NBRK

The current structure of the main investments is as follows: government securities of the Ministry of Finance of the Republic of Kazakhstan - 47.96%, bonds of quasi-public companies - 11.27%, bonds and deposits of second-tier banks of the Republic of Kazakhstan - 7.63%, foreign government securities - 5.47%, securities of international financial organizations - 2.52%, corporate bonds of Kazakhstani issuers - 0.11%.

 

As of February 1, 2023, the investment portfolio in terms of currencies in which financial instruments purchased using pension assets are denominated looks like this: investments in the national currency - 71.63%, in US dollars - 28.31%, in another currency - 0.05% of the portfolio of pension assets. Analyzing the structure of income received, it can be seen that income in the form of interest on securities, including on placed deposits and reverse REPO operations and from market revaluation of securities, amounted to KZT111.01 bln, other income - KZT0.21 bln. And the instruments under external management and related to the revaluation of foreign currency brought losses in the amount of KZT45.03 bln, which confirms the influence of geopolitical factors on investment income received this year. However, the total income for January 2023 is positive.

 

As a result of investment activities, as well as due to the volatility of foreign exchange rates and changes in the market value of financial instruments, the accrued investment income from the beginning of 2023 amounted to KZT66.19 bln.

 

Against the background of the aggravation of the geopolitical situation, increased volatility in global financial markets, accelerating inflation, as well as rising yields on bonds of developed and developing countries, the return on UAPF pension assets distributed to the accounts of contributors (beneficiaries) since the beginning of 2023 amounted to 0.44%.

 

At the same time, as of February 1, 2023, the return on pension assets for the last 12 months (from February 2022 to January 2023) for UAPF contributors (beneficiaries) amounted to 6.93%.

 

It is important to note that the return on pension assets for certain short periods of time is not an indicator of the effectiveness of their management. Pension assets are characterized by a long investment horizon and one of the main objectives of their investment is to obtain real returns in the long term. The cumulative return for the period from April 2014, when the consolidation of pension assets was completed, to January 2023 amounted to 116.88%. For 9 years from 2014 to 2022, in annual terms, the return on pension assets of the UAPF is 9.33% per annum.

 

A detailed structure of the investment portfolio of financial instruments managed by the NBK, indicating issuers and an overview of investment activities, are posted on the official website of the UAPF. Recall that in Kazakhstan there is a model of the state guarantee of the safety of pension savings. In accordance with Article 5 of the Law of the Republic of Kazakhstan On Pension Provision in the Republic of Kazakhstan, the state guarantees recipients the safety of compulsory pension contributions and compulsory occupational pension contributions to the UAPF in the amount of actually made contributions, taking into account the inflation rate at the time of obtaining the right to pension payments.