Kadyrzhan Damitov: it was planned that the pension reform would become an impetus for the development of the stock market in Kazakhstan

Kadyrzhan Damitov: it was planned that the pension reform would become an impetus for the development of the stock market in Kazakhstan

The next link in the series of dialogues about the pension system of Kazakhstan for its 25 th
anniversary was a conversation with Kadyrzhan Kabdoshevich Damitov, an economist and political
figure in Kazakhstan, ex-chairman of the National Bank of the Republic of Kazakhstan (1998-1999), ex-
president of the Kazakhstan Stock Exchange: KASE (2009-2013), acting as a member of the Board of
Directors, independent director of Unified Accumulative Pension Fund JSC (2017-2020).
Kadyrzhan Damitov spoke about the situation in the country at the time of the implementation of
the pension reform, the role of pension funds in the development of the state’s economy, the tasks facing
the UAPF, difficulties and ways to overcome them, and much more in an interview with the БЖЗҚ
ЕНПФ YouTube channel.
“In 1998, when I became the head of the National Bank, the distributive pension system, which
was unable to meet the needs of pensioners and created a large burden on the country’s economy and
budget, was replaced by a funded mixed pension system. It was a difficult year, the Asian financial crisis
continued, one of the most severe economic crises in Russian history broke out, accompanied by default
and a sharp devaluation of the ruble, which also affected the economic state of Kazakhstan. There was a
devaluation of the tenge and a transition to a freely floating exchange rate. The government took timely
anti-crisis measures, the National Bank implemented compensation measures, thanks to which it was
possible to secure the functioning of the banking system and mitigate the consequences of the crisis. A lot
of work was done to improve many internal and external processes in governing the country, a number of
new approaches were developed in the country’s economic policy,” recalls Kadyrzhan Damitov, talking
about how the financial system survived the trials of that time.
When the pension reform was conceived, it was planned that it would become an impetus for the
development of the stock market. In the funded component of the implemented multi-level pension
system, an important part is the investment component: pension contributions are invested and generate
income. At the same time, the stock market receives long-term capital, which, through various financial
instruments, ensures the development of sectors of the domestic economy. The share of investment
income in 1998 was 6% of pension savings, and in 1999 it was already 20%; in subsequent years it grew
and continues to grow.
Pension funds at one time became significant institutional investors, as well as the main buyers of
securities of Kazakh issuers. Kadyrzhan Damitov emphasized the active participation of pension funds in
the People's IPO program, which contributed to the development of the stock market of Kazakhstan. In
2013, the largest institutional investor was the UAPF, which united the pension funds operating at that
time in the country.
“Combining all pension funds into one is not a simple decision, but it has a number of positive
aspects. Now the state, represented by the Government, as the sole shareholder of the UAPF, and the
National Bank, as an investment manager with extensive professional experience, are responsible for the
safety of pension capital. Thanks to the activities of the UAPF, a unified database of contributors and

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pension assets was created, and a lot of work was done to return problem assets. After the initial
settlement in 2017, when I held the position of independent director of the UAPF, the portfolio of
problem assets amounted to 40 billion tenge. Moreover, 70% of the repaid debt was settled between 2017
and 2020.
I would also note that during the period of activity, the work of the UAPF information systems has
been significantly improved, internal control has been strengthened, and instructions and rules of the
UAPF have been developed and implemented in terms of risk management to maintain the continuous
activities of the fund. A test such as the global COVID-19 pandemic has demonstrated the ability of the
UAPF to provide remote services to the population without failures or problems, which indicates the
technical equipment, proven business processes and powerful IT infrastructure of the UAPF,” shared
Kadyrzhan Damitov.
Watch the interview on the БЖЗҚ ЕНПФ YouTube channel at the links:
https://youtu.be/_G3G0xFJiFE
https://www.youtube.com/watch?v=IRTO86NTybk&list=PLfxOvFDKS5j9PCILWufKSp2IzIoxPxBSp&index=25

The UAPF was established on August 22, 2013 on the basis of GNPF APF JSC. The UAPF founder and shareholder is the
Government of the Republic of Kazakhstan represented by the State Institution “Committee of State Property and
Privatization” of the Ministry of Finance of the Republic of Kazakhstan. UAPF pension assets are managed by the National
Bank of the Republic of Kazakhstan. From January 1, 2016, the functions for developing proposals to improve the
management of pension assets were transferred to the National Fund Management Council. In accordance with the pension
legislation, the UAPF attracts compulsory pension contributions, compulsory occupational pension contributions, voluntary
pension contributions, pension benefits, individual accounting of pension accumulations and benefits, provides the contributor
(beneficiary) with information on the status of his pension accumulations (for more information visit www.enpf.kz)