Use of pension savings for treatment
Topic 1
How UAPF contributors will receive lump-sum pension payments in order to improve their living conditions, as well as pay for treatment for themselves, their spouses or close relatives
On December 23, 2020, the Parliament of Kazakhstan adopted the law “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Restoring Economic Growth”, which provides for the use of part of pension savings for targeted needs. According to the law, from 2021, UAPF contributors will be granted the right to use part of their pension savings to improve housing conditions, pay for treatment, or transfer it to private management companies.
The right to use part of their pension savings for targeted needs will be available to:
- working citizens who have pension savings formed at the expense of mandatory pension contributions (OPC) and mandatory occupational pension contributions (OPPC). The right to targeted use is provided for citizens who have savings exceeding a certain minimum sufficiency threshold, which is determined separately for each age.
- accomplished pensioners (including pensioners from law enforcement agencies) - within no more than 50% of the remaining amount of pension savings in the UAPF. The right is provided on the condition that the total amount of their pension (including retirement or service pension, basic pension) provides a replacement for lost income at a level that meets international standards (at least 40%).
- persons who have concluded pension annuity agreements with insurance companies, providing them with lifelong annuity payments.
For the improvement of living conditions and treatment, citizens will contact the authorized operator. On the issues of using pension savings for treatment, Otbasy Bank was determined by the decision of the Government of the Republic of Kazakhstan as such an operator.
The UAPF will continue to keep personalized records of pension savings and will make lump-sum payments for the specified purposes by sending the amounts of savings determined by the contributor independently, at the request of the authorized body, received in the form of an electronic notification. You can find out the available amount of pension savings in your personal account on the UAPF website or mobile application.
We remind you that according to paragraph 1 of Article 320 of the Tax Code, income in the form of pension payments from the UAPF is subject to individual income tax (IPT) at a rate of ten percent at the source of payment. Withholding of the IIT is made in aggregate from all the amount of payments to the contributor (beneficiary) at the expense of the CPC and CPC. At the same time, according to the Law “On Amendments and Additions to the Code “On Taxes and Other Obligatory Payments to the Budget” (Tax Code)”, individuals are granted the right to defer the payment of individual income tax when they use lump-sum pension payments in accordance with the legislation on pension security, as well as determining the procedure for its calculation, deduction and payment.
In addition, taking into account the application of tax deductions in relation to the categories of persons for which information confirming the benefit can be obtained by the UAPF from the IS of state bodies integrated with the IS of the UAPF. At the same time, for other categories of persons, the use of tax deductions is possible upon submission of supporting documents, relevant applications to the UAPF offices.
Topic 2
On the transfer of pension savings to trust management of the investment portfolio manager
The right to transfer part of the savings, exceeding a certain threshold, into investment management by management companies will allow depositors to take part in the management of their savings.
Persons entitled to transfer pension savings from trust management of the National Bank of the Republic of Kazakhstan to trust management of an investment portfolio manager (IPM) are contributors who have pension savings formed at the expense of CPC and (or) CPC. Their savings must exceed the difference between the actual amount and the minimum pension savings sufficiency threshold. In addition, this right applies to citizens who have entered into pension annuity agreements with insurance companies that provide them with lifelong annuity payments.
To transfer pension savings to the trust management of the PIP, you must have:
1) a written application of the investor;
2) an agreement on trust management of pension assets, as well as a custodial agreement concluded between UAPF, UIP and a custodian bank;
3) conditions regarding the sufficiency of pension savings for their transfer to the PIP;
4) that the PIS specified in the depositor's application complies with the requirements established by the regulatory legal act of the authorized body.
An application for the selection (change) of the investment portfolio manager or for the return of pension savings held in trust by the investment portfolio manager to the trust management of the National Bank of the Republic of Kazakhstan is submitted to the UAPF, either through the Fund's website, or at the UAPF service offices.
It is important to emphasize that the transfer of pension savings from the trust management of the National Bank of the Republic of Kazakhstan to the trust management of an investment portfolio manager (IPM) is not subject to taxation.
Topic 3
Obtaining information on the state of pension savings in order to make a decision on their early targeted use
To determine the adequacy threshold based on your age, you need to obtain an individual retirement account (IPA) statement, taking into account investment income. This can be done via an Internet connection in a personal account on the enpf.kz website or in a mobile application, to access which the depositor needs an electronic digital signature (an EDS can be remotely obtained on the egov.kz portal) or an IIN and a password registered in the UAPF database .
At the same time, the contributor will be able to immediately see the amount of pension savings at the expense of the CPC and (or) CPC, available for withdrawal in order to improve housing conditions and (or) pay for treatment:
- with withholding of the IIT with deferred monthly equal installments in accordance with the schedule of pension payments established by UAPF JSC in connection with reaching retirement age, or
- with deduction of IIT at a time in full with a one-time pension payment for the purpose of improving housing conditions and (or) for treatment.
Topic 4
The role of the UAPF in the implementation of the mechanism for the early use of pension savings
The main tasks of the UAPF are to ensure reliable accounting of contributions, financial instruments, investment income, provide depositors with information about their savings, provide pension services, and make pension payments.
Since the UAPF is a single accounting center and operator of all information and financial flows of the accumulative pension system, it takes an active part in the implementation of the Law of the Republic of Kazakhstan "On amendments and additions to certain legislative acts of the Republic of Kazakhstan on the restoration of economic growth", providing technical, organizational, information aspects of these processes in cooperation with government agencies, an authorized operator, custodian banks, investment managers and insurance companies, depositors.