1) Please tell me, does early withdrawal of pension savings above the minimum adequacy threshold affect the size of the future pension?
The funded pension system of Kazakhstan is focused, first of all, on providing for citizens after retirement. Pension savings of Kazakhstanis are formed through pension contributions, as well as investment income on pension assets. The level of future pension is affected by the regularity and amount of contributions, as well as the investment return on pension assets.
Withdrawal of pension savings above the minimum sufficiency threshold (MST) from the UAPF causes a decrease in the size of future pension payments. Given the above, before deciding to withdraw pension funds, you need to decide what level of pension you expect upon reaching retirement age and determine your priorities.
Let us remind you that the minimum sufficiency threshold (MST) is the minimum amount of pension savings required to ensure monthly payments not lower than the minimum pension (taking into account the minimum basic pension benefit). In other words, the minimum sufficiency threshold is the minimum that must remain in the account so that the contributor, upon reaching retirement age, receives pension benefits (taking into account the minimum basic pension benefit from the state budget) of no less than the minimum pension.
2) Please name the minimum and maximum amount of lump sum pension benefit payments (LSPBP) that citizens can withdraw this year?
The size of the LSPBP depends on the amount of pension savings and is calculated individually. According to Art. 224 (clause 4) of the Social Code of the Republic of Kazakhstan, the opportunity to use pension savings formed at the expense of the CPC can be used by contributors whose savings exceed the minimum sufficiency threshold (they can use savings that exceed the minimum sufficiency threshold in accordance with age), pensioners whose pension is at least 40% of lost income (they can use up to 50% of their savings), beneficiaries for length of service, as well as contributors who have entered into a pension annuity agreement (they can use up to 100% of their savings)
3) Please explain how and where pension savings are invested?
Pension savings of Kazakhstanis should work and generate income. Therefore, pension savings are invested both in the country and abroad on market terms in various financial instruments in different currencies. As a result, investment income consists of various sources: income in the form of remuneration on securities (deposits and other transactions); income in the form of market and currency revaluation of financial instruments; income on assets under external management, etc.
This is a widespread global practice. Pension funds around the world are constantly looking for attractive and profitable opportunities to invest and increase the pension capital of contributors.
The main principle of investing pension assets is their diversification. This approach ensures their long-term safety and stability of income from investment. This is important, since the main share in pension savings, as a rule, is investment income accumulated over many years. The National Bank of the Republic of Kazakhstan (NBRK) is engaged in investing pension assets, and since 2021 - investment portfolio managers (IPM).
The list of financial instruments permitted for acquisition at the expense of pension assets for the National Bank is approved by the Resolution of the Government of the Republic of Kazakhstan, and for investment portfolio managers - by the Resolution of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market.
Pension asset managers - the NBRK and IPM have their own strategies for investing pension assets and independently determine the structure of the investment portfolio within the framework of the investment declaration. The choice of specific instruments for investment is based on the strategy of the trustee and his tasks to ensure the reliability and profitability of investments.
4) Is it possible for contributors to track investment income?
Each contributor has the opportunity to see their investment income in their personal account on the enpf.kz website or in the mobile application. Information on investment management of UAPF pension assets and on financial instruments in which UAPF pension assets are placed is published on the official UAPF website (www.enpf.kz) in the section "Indicators/Investment activities”.
5) Are pension savings returned to citizens of the Republic of Kazakhstan if they move to another country for permanent residence?
Yes. Foreigners and stateless persons who have left the country for permanent residence, have pension savings in the UAPF through compulsory, compulsory occupational pension contributions (CPC, COPC) and VPC and have submitted documents in accordance with Kazakhstani legislation may exercise the right to pension payments from the UAPF in connection with leaving for permanent residence outside of Kazakhstan.
There are 3 ways to submit documents to the UAPF:
1. You can personally visit the UAPF office with a foreign passport and bank account information
2. A representative (attorney) of the person leaving for permanent residence can personally visit the UAPF office with a package of documents.
3. You can send the necessary documents to the postal address of one of the regional branches of the UAPF.
You can pre-check the documents being sent for pension benefits from the UAPF by using the UAPF electronic service “Pre-check of documents for pension benefit”.
Upon receipt of documents, UAPF requests information from the information systems of state bodies of Kazakhstan on whether the foreigner or stateless person applying has documents certifying the identity of a citizen of Kazakhstan, or a residence permit for a foreigner in Kazakhstan, or a certificate of a stateless person issued by an authorized Kazakh body, and their validity.
If these documents are not valid, UAPF makes the pension benefit payment within 10 days.
Please note that the payment of pension savings is made only to the bank account of the recipient, even if the recipient of pension payments is an incapacitated/partially incapacitated adult. Payment of pension savings to the bank account of a legal representative (guardian/trustee), as well as an authorized person, is not allowed. Thus, a person applying for permanent residence in another country cannot transfer their pension savings to their close relatives or other persons.
For your information, we inform you that the UAPF website contains a list of required documents depending on the method of their submission to UAPF, requirements for their execution, as well as application forms and samples of their completion, and a sample power of attorney.
