Early use of pension savings for housing and medical treatment
Who will be able to use part of their retirement savings?
According to the Law "On amendments and additions to some legislative acts of the Republic of Kazakhstan on the issues of restoration of economic growth" the right to use part of their pension savings to improve housing conditions in their favor or spouse (wife) or relatives, and (or) to pay for treatment for yourself or a spouse (wife) or close relatives can take advantage of the following persons, who UAPF pension savings formed at the expense of mandatory pension contributions (MPC) and (or) mandatory occupational pension contributions (oppv):
1) the amount of pension savings that exceeds the threshold of minimum sufficiency of pension savings.
In this case the lump-sum pension payment cannot exceed the amount of the difference between the sum of pension savings at the expense of MPC and (or) APPV of the contributor (recipient) and the minimum threshold of sufficiency of pension savings, calculated according to the Method of determining the minimum threshold of sufficiency of pension savings approved by the Government of the Republic of Kazakhstan on the date of receipt of electronic notification from an authorised dealer;
2) in which the size of the pension provides a replacement coefficient of the average monthly income of the recipient at a level not lower than 40 percent, determined in accordance with the procedure established by the Government of the Republic of Kazakhstan.
At the same time, a one-time pension payment may not exceed 50 percent of the amount of pension savings due to the OPV and (or) OPV of the depositor (recipient) on the date of receipt of the initial electronic notification from the authorized operator;
3) who have concluded a pension annuity agreement with an insurance company;
At the same time, a one-time pension payment may not exceed the amount of pension savings at the expense of OPV and (or) OPV on the individual pension accounts of the depositor (recipient).
To exercise the right to use part of the pension savings, citizens will first have to check their pension savings and make sure that the amount available for withdrawal is available in their individual pension account in the UAPF.
Within what limits is it possible to withdraw?
Investors who have total pension savings (MON) due to OPV and (or) OPV exceeds the minimum threshold for adequacy – within the difference between the actual amount of MON due to the OPV and (or) OPV and the threshold of minimal sufficiency PN subject to individual income tax (hereinafter – pit) depending on the method of retention of IDUs indicated in the statement filed by the depositor to the authorized operator (hereinafter EE).
Recipients (pensioners) whose pension amount or pension amount or monthly maintenance provides a replacement coefficient of the average monthly income of the recipient at a level not lower than 40 percent, determined in accordance with the procedure established by the Government of the Republic of Kazakhstan – within 50 percent of the amount of MON at the expense of OPV and (or) OPV taking into account IPN, depending on the method of withholding IPN specified in the application submitted by the UO.
Concluded agreement of pension annuity with an insurance company on the implementation of the insurance payments within the remainder of PN on individual pension accounts (hereinafter – IRS) with account of IDUs, depending on the way of holding pit.
How do I know if I am eligible for early withdrawal?
This can be done through your Personal Account on the enpf website.kz or in a mobile application, to access which the depositor needs an electronic digital signature (EDS can be obtained remotely on the portal egov.kz) or the IIN and password registered in the UAPF database.
At the same time, the depositor can immediately see the amount of pension savings due to OPV and (or) OPV available for withdrawal in order to improve housing conditions and (or) pay for treatment. The method of payment for IPN is chosen by the depositor independently and is indicated in the application submitted by him to the authorized operator.
There are two ways to pay for IPN:
- withholding of individual income tax with deferred payment on a monthly basis in equal shares in accordance with the schedule of pension payments established by UAPF JSC when the depositor reaches retirement age, or
- deduction of IPN in full at a time with a one-time pension payment for the purpose of improving housing conditions and (or) paying for treatment.
What is the algorithm for using pension savings?
To exercise the right to use a part of pension savings, citizens must first check their savings and make sure that the required amount exceeding the sufficiency threshold is available on their IPS.
The UAPF provides affordable and fast ways to obtain a statement through the fund's website or mobile application.
Those who have made a decision on the targeted withdrawal of pension savings will be able to contact the authorized operator for the purchase of housing and treatment. The authorized operator reviews the application and all necessary documents provided by the applicant.
It should be noted that the repair of only purchased housing is provided, and not the current repair of existing housing.
After receiving a notification from the authorized operator, the UAPF will transfer pension savings for their crediting to special depositors ' accounts opened with the authorized operator.
For what purposes can pension savings be used?
Is it possible to use pension savings for the purchase of housing by signing a lease agreement with the right to buy out or by signing a contract for shared participation in housing construction?
Can pension savings be used to refinance a previously borrowed loan?
Can members of the same family accumulate withdrawable savings for the same purpose? For example, for the improvement of living conditions or purchase of a house?
Is it possible to buy another house if the family already has an apartment?
These issues are within the competence of the authorized body "Otbasy Bank".
Where should I apply for the implementation of the possibility of using pension savings for housing and medical treatment? Who is the "Authorized Operator"in this case?
Having made a decision on the early use of pension savings, the depositor (recipient) must contact the authorized operator. Authorized operators will be second-tier banks. The application can be submitted via the website of the authorized operator selected by the depositor or at its office.
One of the authorized operators defined by the Government of the Republic of Kazakhstan is Otbasy Bank. It opens and maintains special accounts for one-time pension payments from the UAPF in order to improve housing conditions and (or) pay for treatment, to which the UAPF transfers one-time pension payments from pension savings formed at the expense of mandatory pension contributions and (or) mandatory professional pension contributions upon receipt of an application in the form of an electronic notification.
The authorized operator checks the intended use of lump-sum pension payments by recipients. The services of the authorized operator related to the transfer of one-time pension payments from a special account for the purposes provided for in the Rules are paid at the expense of the recipients ' funds in accordance with the internal documents of the authorized operator.
The rights and obligations of recipients associated with the receipt of lump-sum pension payments and their liability for improper use of lump-sum pension payments, the breach of the "terms of use lump sum pension payments for the purpose of improving housing conditions" are defined by the agreement on the use of lump-sum pension payments for the purpose of improving housing conditions between the designated operator and the recipients.
What functions will the UAPF perform to implement the Law of the Republic of Kazakhstan "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on restoring economic Growth"?
The main tasks of the UAPF are to ensure reliable accounting of contributions, financial instruments, investment income, providing depositors with information about their savings, providing pension services, and making 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, informational aspects of these processes in cooperation with state bodies and organizations, custodian banks, investment managers and insurance companies, depositors.
Are the amounts of early use taxable?
Since pension contributions are not subject to individual income tax (hereinafter referred to as IIT), pension payments are subject to IIT.
At the same time, the depositor gets the right to choose to pay individual income tax when making a payment: you can use the deferred payment of IPN or pay it in full with one-time pension payments from the UAPF to improve housing conditions and (or) pay for treatment.
In this case, tax deductions are applied, if any, and the rights to apply them.
Why can the use of pension savings be denied?
Within 5 (five) working days from the date of receipt of the electronic notification to the UAPF from the authorized operator (hereinafter - UO) on the accepted application of the UAPF depositor, the transfer of pension savings (hereinafter - PN) may be refused, indicating the reason for refusal in the following cases::
- availability in the information systems (IS) of state bodies of information about the invalidity of the identity card of the depositor (recipient) and (or) death;
- the depositor (recipient) does not have pension savings in the UAPF;
- the lack of the contributor (recipient) of the right to early use if:
the amount of MON due to the OPV and (or) APPV of the depositor (recipient) on the date of receiving the notification email from EE does not exceed the threshold of minimal adequacy PN according to the "Methodology of determining the minimum threshold of sufficiency of pension savings»;
the pension recipient's pension payments for age together does not ensure the replacement rate of the average monthly income of the recipient at no less than 40 percent, according to "the Method of determining the replacement rate of the average monthly income of the recipient of pension payments".
How many depositors and for what amount can use the right of early withdrawal?
According to the UAPF, as of December 1, 2020, more than 761 thousand depositors can use the right of early use, with more than 2.4 trillion tenge on their accounts.
What types of medical services can pension savings be used for?
The list of types of medical services paid for by lump-sum pension payments is determined by the "Rules for the use of lump-sum pension payments for treatment". The decision on the possibility of use is made by the medical commission in the medical organization at the place of application of the applicant.
In general, questions concerning treatment should be addressed to the Ministry of Health and the authorized operator for the use of pension savings for treatment.
When calculating the sufficiency threshold, will the investment income be used? Will payments be made first from the amount of investment income or from the amount of contributions?
When calculating the sufficiency threshold, the entire amount of pension savings will be taken into account, which, as is known, consist of pension contributions and investment income. Therefore, payments will be made from the total amount of savings, taking into account investment income in proportion.