The section 5 questions of the UAPF answers topical questions

1) Hello! Can you explain how my pension is formed in the UAPF? Everything I have accumulated is just paid to me once?

In accordance with the Law of the Republic of Kazakhstan "On Pension Provision in the Republic of Kazakhstan" (hereinafter - the Law) and the Rules for the Implementation of Pension Payments, Lump-sum Pension Payments for the Purpose of Improving Housing Conditions and (or) paying for treatment, formed by mandatory pension contributions, mandatory occupational pension contributions from the unified accumulative pension fund, their return to unified accumulative pension fund approved by the decree of the Government of the Republic of Kazakhstan dated 02.10.2013 No. 1042 (hereinafter referred to as the Rules) pension payments from the UAPF are made from pension savings formed at the expense of the OPV, in the form of monthly pension payments according to the established schedule and (or) insurance payments from the insurance company in accordance with the pension annuity agreement at the expense of pension savings, as well as in the form of one-time pension payments in order to improve housing conditions and (or) payment for treatment to persons specified in paragraph 1-1 of Article 31 of the Law.

The amount of the monthly pension payment is defined as one-twelfth of the annual amount of pension payments calculated in accordance with the Methodology for calculating the amount of pension payments approved by the Decree of the Government of the Republic of Kazakhstan dated 02.10.2013 No. 1042.

At the same time, the calculated amount of the monthly pension payment is paid in the amount of at least 70 percent of the subsistence minimum established for the corresponding fiscal year by the law on the republican budget (from 01.04.2022 – 26,172.30 tenge = 70% * 37,389).

If the balance of pension savings on the IPS after the implementation of the next monthly payment amounts to less than 70 percent of the subsistence minimum established for the corresponding fiscal year by the law on the republican budget, this balance is paid together with the amount of the next payment.

It is possible to receive pension savings at a time if the amount of pension savings on the date of the recipient's application does not exceed twelve times the minimum pension established by the law on the republican budget for the corresponding financial year.

At the same time, according to the provisions of paragraph 1-1 of Article 31 of the Law, persons with pension savings in the UAPF, including those who have a pension, and for retired judges, the amount of pension and monthly maintenance provides a replacement coefficient of the recipient's average monthly income at a level not lower than 40 percent, determined in accordance with the procedure determined by the Government of the Republic of Kazakhstan, have the right to one-time pension payments at the expense of the OPV in order to improve housing conditions in their favor or spouse (spouse), or close relatives and (or) to pay for treatment for themselves or spouse (spouse), or close relatives.

At the same time, the amount of a one-time pension payment due to the OPV to the specified persons may not exceed 50 percent of the amount of pension savings due to the OPV of the depositor (recipient).

It should be noted that the replacement coefficient of the average monthly income is calculated in accordance with the methodology for determining the replacement coefficient of the average monthly income of the recipient with pension payments, approved by the Decree of the Government of the Republic of Kazakhstan dated 06.01.2021 No. 1, including on the basis of data obtained from information systems of state bodies.

2) Is it true that pension savings are taxed? Why are we being forced to pay tax on my own retirement savings?

It should be noted that pension contributions when transferred to an individual pension account are not subject to income tax. Pension savings relate to income that is taxed at the source of payment. Taxation of pension payments is regulated by the Tax Code of the Republic of Kazakhstan.

According to Article 326 of the Tax Code, income in the form of pension payments subject to taxation includes payments made by the UAPF:

1) from taxpayers' pension savings formed at the expense of: mandatory pension contributions in accordance with the legislation of the Republic of Kazakhstan mandatory occupational pension contributions in accordance with the legislation of the Republic of Kazakhstan;

voluntary pension contributions in accordance with the terms of the pension provision agreement at the expense of voluntary pension contributions;

2) natural persons-residents of the Republic of Kazakhstan who have reached retirement age and have left for permanent residence outside the Republic of Kazakhstan in accordance with the Law of the Republic of Kazakhstan "On Pension provision in the Republic of Kazakhstan";

3) natural persons-residents of the Republic of Kazakhstan who have not reached retirement age and have left for permanent residence outside the Republic of Kazakhstan in accordance with the Law of the Republic of Kazakhstan "On Pension provision in the Republic of Kazakhstan";

4) individuals in the form of pension savings inherited in accordance with the procedure established by the legislation of the Republic of Kazakhstan;

5) to individuals in the form of a one-time payment for the burial of a deceased person who has pension savings, in accordance with the procedure established by the legislation of the Republic of Kazakhstan.

According to Article 320 of the Tax Code, the taxpayer's income, with the exception of income in the form of dividends received from sources in the Republic of Kazakhstan, is taxed at the rate of 10 percent.

According to paragraph 3 of Article 353 of the Tax Code , the amount of taxable income in the form of pension payments from the UAPF is determined in the following order:

the amount of income in the form of pension payments subject to taxation,

minus

the amount of adjustment for individual income tax provided for in paragraph 1 of Article 341 of the Tax Code.

minus

the amount of tax deductions in the manner and amounts specified in paragraph 1 of Article 345 and in subparagraphs 2) and (or) 3) of paragraph 1 of Article 346 of the Tax Code;

According to Article 345 of the Tax Code, a tax deduction is applied to income in the form of pension payments subject to taxation in the following amounts:

1) for payments provided for in subparagraph 1) of Article 326 of the Tax Code - in the amount of a 14-fold monthly calculation index established by the law on the republican budget and effective on the date of accrual of income in the form of a pension payment, for each month for which the pension payment is made;

2) for payments provided for in subparagraph 2) of Article 326 of the Tax Code - in the amount of 168 times the monthly calculation index established by the law on the republican budget and effective on the date of accrual of income in the form of a pension payment.

The adjustment for individual income tax (hereinafter – IPN) in accordance with subparagraph 18) of paragraph 1 of Article 341 of the Tax Code includes payments for burial, if there is a death certificate or death certificate, within 94 times the size of the minimum calculated indicator.

Also, in accordance with sub-paragraphs 2) and 3) of paragraph 1 of Article 346 of the Tax Code, standard tax deductions of 882 times the monthly calculation index for a calendar year are applied to the following recipients of pension payments when determining the amount of taxable tax, based on the fact that the recipient on the date of payment from the UAPF is:

- a participant in the Great Patriotic War and a person equated to it;

- a person awarded orders and medals of the former USSR for selfless work and impeccable military service in the rear during the Great Patriotic War;

- a person who worked (served) for at least six months from June 22, 1941 to May 9, 1945 and was not awarded orders and medals of the former USSR for selfless work and impeccable military service in the rear during the Great Patriotic War;

- disabled person of groups I, II or III;

- a disabled child;

- one of the parents, guardians, guardians of a disabled child, - for each such disabled child until they reach the age of eighteen;

- one of the parents, guardians, trustees of a person recognized as disabled due to "disabled since childhood" - for each such person during his life;

- one of the adoptive parents (adopters), - for each such person until the adopted child reaches the age of eighteen;

- one of the foster parents who have adopted orphaned children and children left without parental care into a foster family - for each such person for the period of validity of the agreement on the transfer of orphaned children, children left without parental care to a foster family.

Article 351-1 of the Tax Code provides for the specifics of calculating, withholding and paying personal income tax from lump-sum pension payments withdrawn by the depositor (recipient) from the UAPF in order to improve housing conditions and (or) pay for treatment, in accordance with the procedure established by the Law on Pension Provision.

At the same time, the IPN is calculated by the UAPF by applying the rates established by Article 320 of the Tax Code (in the amount of 10%) to the amount of a one-time pension payment.

Deduction and transfer of personal income tax from the amounts of one-time pension payments from the UAPF according to paragraph 2 of Article 351-1 of the Tax Code are made by the UAPF in accordance with the application of an individual to withhold personal income tax in one of the following ways:

1) at a time, no later than the day of the one-time pension payment in accordance with the procedure provided for in Article 351 of the Code;

2) monthly in equal shares for no more than sixteen years according to the schedule established by the UAPF for pension payments.

Withholding of IPN is carried out on the basis of an application for withholding of IPN submitted by an individual to a tax agent in the person of the UAPF in the form established by the authorized body in coordination with the authorized body in the field of pension provision.

Please note that the following incomes of recipients of pension payments are subject to IPN at the rate of 10 (ten) percent without tax deductions: