Emblem
Official Source of the
Prime Minister of the
Republic of Kazakhstan
Menu
Emblem
Close button

Over 113 thousand Kazakhstanis to be able to use pension savings for purchase of housing — Ministry of Labor and Social Protection of the Population

Monday, 03 February 2020, 15:14:59

At the press conference in the press center of the Government, the Minister of Labor and Social Protection of the Population Birzhan Nurymbetov clarified further improvements to the pension system in Kazakhstan.

In the Address to the people of Kazakhstan dated Sep. 2, 2019, the Head of State instructed the Government to submit proposals by the end of 2019 on the possibility of targeted use by working citizens of part of their pension savings.

To consider this request, a working group was created under the Government chaired by the Deputy Prime Minister Berdibek Saparbayev. The members of the working group studied the current state and development prospects of the funded pension system, possible risks, international experience, and took into account preliminary actuarial calculations on the sustainability of the Unified National Pensions Fund.

The developed approaches were supported by the majority of the working group members, approved by the Economic Policy Council and received the approval of the Head of State as “the first step in solving this important issue.”

“To date, the UNPF has 1.4 billion tenge of savings and 9.9 million pension accounts. But, unfortunately, the volume of 53% of them is less than 500 thousand tenge, 16% — from 500 thousand to 1 million tenge, 15% — from 1 million to 2 million tenge. Thus, 84% of depositors have less than 2 million tenge of savings,” said Nurymbetov.

Given this, the government proposed further improvement of the funded pension system. In addition, there is a need to solve several problems. The first is that Kazakhstan’s funded pension system is very young. It is only 21 years old. In general, in developed countries, the formation of the pension system requires 35-40 years. The second is the low income level of the population. The third — untimely payment of mandatory pension contributions. Today, about 100 thousand entrepreneurs do not make pension contributions for their employees. There are 2.7 billion tenge of debts. Fourth, investment income is not being built up properly.

The working group proposed several options for using part of the pension savings.

The first category — working citizens who are offered to grant the right to use part of their pension savings to purchase housing or expensive treatment (according to a separate list) — these are UNPF depositors who have pension savings that exceed the “sufficiency threshold.”

Moreover, the threshold of sufficiency was calculated by the UNPF for each age separately, for men and women. It was taken into account that people of a younger age have a longer period of future work (until they reach retirement age) to continue accumulating.

The sufficiency threshold proposed by the UNPF is the minimum threshold amount of pension savings that must be accumulated by an average contributor who is constantly participating in a funded pension system (that is, regularly paying pension contributions), taking into account subsequent replenishment to the amount necessary to ensure lifetime payments, at the expense of new contributions and investment income. The younger the contributor, the lower the sufficiency threshold.

For example, for a depositor of 40 years of age (with an average working experience of 18-20 years), the minimum threshold of savings is 6.9 million tenge for men and 9.8 million tenge for women. For a 63-year-old investor, that is, a person who has reached retirement age, this threshold was 8.2 million tenge for men and about 10.1 million tenge for women.

“For a 50-year-old man, the sufficiency threshold is 7.2 million tenge. He will save another 13 years of pension savings. We have 2,906 of them,” the minister said.

According to the ministry, as of November 2019, 113 thousand Kazakhstanis can use this right.

“Today we will think about what else can be envisaged to increase the number of people who can use this right to 500-700 thousand people. The President gave another two months for us to work out these proposals,” Nurymbetov noted.

The second category is held retirees, who are offered to use 50% of their pension savings for housing or expensive treatment. In this case, a prerequisite is the amount of the assigned pension (basic, joint and funded), which ensures replacement of lost income at a level of at least 40%, which corresponds to international standards. There are 119.5 thousand of such pensioners.

“Today, according to the law, people who have reached retirement age can take money from the savings fund only on a monthly basis. Now we want to allow them to immediately take 50% of their savings. But provided that the monthly payment of the remaining amount plus the basic and joint pension of not less than 40% of the income with which he retired,” the minister said.

Nurymbetov noted that all these proposals were voiced during the extended Government session with the participation of the Head of State.

“The President expressed his opinion on this issue, noting that ‘the first step in resolving this important issue’ has been taken. Our goal is not to give out all the savings from the accumulative pension fund, since they are necessary for a decent provision in the old age of our citizens. The head of state emphasized that ‘the issues of combating the shadow economy and increasing the share of cashless payments should remain a priority for both the National Bank and the Government,” Nurymbetov said.

Introduction of 5% of mandatory employer pension contributions

To date, the Roadmap for the further development of the pension system in the Republic of Kazakhstan for 2020-2024 is being developed. On behalf of the President, work will also be continued to gradually expand the circle of citizens who will be given the opportunity to target use part of their pension savings.

The introduction of 5% of the compulsory pension contributions of the employer, which should be paid in favor of workers, was postponed from 2020 to 2023. Thus, in Kazakhstan a pension system will be built based on the joint responsibility of the state, employer and employee.

“Today the state pays 2.2 million people. This is about 2.4 trillion tenge. The state pays a guarantee to those who leave with a funded pension system and whose investment income does not exceed inflation. The employee himself pays 10% from his salary. The Concept stated that employers were also liable in the form of 5% funded contributions for employees to the funded pension fund. The law was adopted and was to enter into force on Jan. 1, 2020. But in his Address, the President, taking into account the views and appeals of the business community, moved the adoption of the law to 2023,” Nurymbetov said.

The draft Roadmap provides proposals for further improving the system of minimum guarantees (including the methodology for determining the size of the minimum pension and other socially significant indicators) and the introduction of a minimum guaranteed pension.

“The introduction of a minimum guaranteed pension was also spelled out in the Concept for the modernization of the pension system. It is very important. Since 1998, we switched to a funded pension system. Today, a solidary or labor pension paid by the state is received by citizens who have earned at least 6 months of service until January 1998. And such people every year less and less. Today, men born in 1957 are already retiring and they no longer have the full required length of service and, accordingly, a full pension,” Nurymbetov said.

Thus, according to the minister, the joint component of the pension system will be gradually phased out. And in 2043, theoretically, there will be no people who will be assigned a retirement pension. There will be only a basic pension. Therefore, the Ministry of Labor and Social Protection of the Population proposed to introduce a minimum guaranteed pension in Kazakhstan in 2028. It will replace today's basic retirement benefit. If today the basic pension payment for those who have an experience of less than 10 years is 54% of the subsistence minimum, then the experience is taken into account. The ministry proposes that the minimum guaranteed pension is intended for those who have less than 5 years of experience, and should be at least 70% of the subsistence minimum and could further increase to 1.5 of the subsistence minimum.


News feed
10 July 2020, 23:55
Forward purchasing, state of crops and food stocks — development of agro-industrial sector of Kazakhstan
10 July 2020, 21:35
Berik Sharip relieved as chair of SK-Pharmacy LLP
10 July 2020, 20:32
Working trip to Atyrau region: Tugzhanov holds emergency meeting on epidemiological situation in region
10 July 2020, 15:07
Government sums up results of socio-economic development for first half of 2020
09 July 2020, 16:13
Operational Headquarters on COVID-19 keeps situation in regions under control
09 July 2020, 14:15
Government's anti-crisis measures: Restoring economic growth and supporting SMEs
07 July 2020, 18:40
Aigul Shaimova appointed vice minister of national economy
07 July 2020, 18:35
Madina Zhunusbekova relieved as vice minister of national economy
07 July 2020, 18:29
Nariman Mukushev relieved as vice minister of labor and social protection of the population of Kazakhstan
07 July 2020, 18:20
How development indicators of AIFC financial market changed during pandemic?
07 July 2020, 16:56
Investment attraction, large-scale construction and international recognition — how the main city of Kazakhstan developed
07 July 2020, 12:10
Tollways, repair and maintenance of roads, introduction of new technologies — interview with Chair of Roads Committee Sairanbek Barmakov
02 July 2020, 23:50
New format of dealmaking and transition to distance education — how online discussions of global economy during the pandemic took place
02 July 2020, 12:07
State Commission approves measures to stabilize epidemiological situation in Kazakhstan
01 July 2020, 18:37
Astana Finance Days: Experts on challenges and opportunities of Islamic finance and fintech industry in post-pandemic era
30 June 2020, 17:49
Prime Minister Askar Mamin holds session of Council of Eurasian Development Bank
30 June 2020, 16:45
Prime Minister of Kazakhstan Askar Mamin held a telephone conversation with Chair of the Russian Government Mikhail Mishustin
30 June 2020, 13:18
Annual demand for IT specialists reached over 30 thousand people — Ministry of Digital Development, Innovation and Aerospace Industry
30 June 2020, 11:18
AIFC proposes to create EduTech Center and Educational IT Alliance
30 June 2020, 11:08
By 2030, educational institutions of Kazakhstan will train over 3 million specialists of new formation — Ministry of Education and Science
30 June 2020, 11:06
Reduction in shadow economy in 2019 gave additional revenue of 1.5 trillion tenge to budget of Kazakhstan
30 June 2020, 10:54
Prime Minister Askar Mamin instructs to implement large-scale project ‘’Digital Bilim” to increase digital literacy
30 June 2020, 10:32
By 2025, shadow economy to be reduced to 20% of GDP — Ruslan Dalenov
30 June 2020, 10:12
97% of entrepreneurs switched to online cash registers — Ministry of Finance
29 June 2020, 18:59
How the Year of the Volunteer implemented, what kind of support the country's media receive and how civil society develops — Aida Balayeva reports to the public
29 June 2020, 17:12
Government session to be held June 30 in Ukimet Uyi
28 June 2020, 09:56
Video Digest: Main events of the week, No. 67
27 June 2020, 10:28
Prime Minister Askar Mamin congratulates media workers on their professional holiday
26 June 2020, 18:59
Bolat Tlepov appointed vice minister of information and social development of the Republic of Kazakhstan
26 June 2020, 18:49
Daniyar Yesin relieved as vice minister of information and social development of the Republic of Kazakhstan
26 June 2020, 18:14
Results in social sphere for 5 months of 2020: Restoring employment and providing new types of support
26 June 2020, 14:14
Azhar Giniyat appointed vice minister of healthcare of the Republic of Kazakhstan
26 June 2020, 14:12
Lyazzat Aktayeva relieved as vice minister of healthcare of the Republic of Kazakhstan
26 June 2020, 14:06
Marat Shoranov appointed first vice minister of healthcare of the Republic of Kazakhstan
26 June 2020, 13:39
Daniyar Vagapov appointed deputy chair of National Bank of Kazakhstan
25 June 2020, 19:05
Prime Minister Askar Mamin holds meeting of Commission on Digitalization under President of Kazakhstan
25 June 2020, 18:24
Prime Minister Askar Mamin introduces Minister of Healthcare Alexey Tsoy
25 June 2020, 08:58
Roman Sklyar discusses development of cooperation in agriculture with German companies
24 June 2020, 18:00
Prime Minister Askar Mamin holds meeting of Council on Transition to Green Economy under President of Kazakhstan
24 June 2020, 10:25
Roman Sklyar holds meeting of Project Office for Entrepreneurship
23 June 2020, 18:59
Gabidulla Ospankulov relieved as vice minister of information and social development of the Republic of Kazakhstan
23 June 2020, 13:18
In second half of 2020, Kazakhstan will continue to reduce oil production
23 June 2020, 12:58
Small and medium-sized enterprises can apply for new loan deferral — Madina Abylkassymova
23 June 2020, 10:59
Prime Minister Askar Mamin congratulates civil servants of Kazakhstan on their professional holiday
23 June 2020, 10:24
Prime Minister Askar Mamin congratulates police of Kazakhstan on their professional holiday
23 June 2020, 10:21
Prime Minister Askar Mamin instructed to ensure readiness for heating season
23 June 2020, 10:11
Government adopts measures to improve business climate in Kazakhstan
23 June 2020, 10:08
Beibut Atamkulov on heating season: Particular attention will be paid to preparing health facilities and residential buildings
23 June 2020, 09:57
As part of preparations for autumn-winter period, country plans to repair 8 power units, 59 boilers, 44 turbines — Ministry of Energy
23 June 2020, 09:34
Production of small and medium-sized businesses amounted to 31.2 trillion tenge in 2019 — Ministry of National Economy
© 2019 - 2020 Press service of the Prime Minister of the Republic of Kazakhstan.
Developed by SoftDeCo.