1. Is it possible to withdraw the money due under the National Fund for Children program ahead of schedule? Does a child have the right to receive them when going abroad for permanent residence? What happens to the savings if a child dies before or after the age of 18?
Until children reach 18 years of age, target requirements and investment income will accrue without the right of early withdrawal. Let us remind you that upon reaching the age of majority, the recipient has the right to use the accumulated amount only for education or housing.
Those who leave Kazakhstan for permanent residence in another state lose the right to use the funds of the National Fund.
In the event of the death of a child before or after 18 years of age, savings are inherited in the manner established by the civil legislation of the Republic of Kazakhstan. The savings will be transferred to a bank account opened with an authorized operator to the child’s heirs. which can be close relatives or a legal representative. Funds can be used for any purpose.
2. How will employer compulsory pension contributions (ECPC) change in the coming years?
Let us recall that from January 1, 2024, the funded pension system of Kazakhstan was supplemented with a new component - employer compulsory pension contributions (hereinafter referred to as ECPC). The amount of ECPC will depend on the employee's monthly income and will be financed by employers. In order to maintain a balanced load on the employer, ECPC will be transferred with a gradual increase in contribution:
· from January 1, 2024 – 1.5 percent;
· from January 1, 2025 – 2.5 percent;
· from January 1, 2026 – 3.5 percent;
· from January 1, 2027 – 4.5 percent;
· from January 1, 2028 – 5.0 percent.
The gradual introduction of ECPC, as well as their classification as deductions from taxable income, is intended to smooth out the burden on the employer. In addition, according to the law, ECPC should not be paid for all workers, but only for those born in 1975 and later. It is planned that the introduction of the ECPC will help increase the level of pension provision for the employee after his retirement.
3. Please tell us how, where and when you need to apply to apply for a pension?
The UAPF reminds that persons who have pension savings in the UAPF, formed through compulsory pension contributions (CPC) and (or) compulsory occupational pension contributions (COPC), and who have reached the generally established retirement age, as well as persons with disabilities of the first and second groups, if disability is established indefinitely, have the right to receive pension benefits from the Unified Accumulative Pension Fund according to the established schedule.
To assign pension benefits from the UAPF in connection with reaching retirement age, recipients must promptly contact the Public Service Center at their place of residence, and for payment in connection with the establishment of disability of the first or second group indefinitely - to the UAPF divisions or through the UAPF website with an electronic digital signature. Documents can be submitted to the Public Service Center along with the application 10 days before the recipient reaches retirement age. We strongly recommend that you adhere to this deadline, because this is especially important for receiving a state pension benefit, the assignment of which requires verification of work experience based on the submitted documents. In addition, according to the law, the assignment of old-age pensions and state basic benefits is made from the date of application. Such a day is considered the day of registration of the application and necessary documents in the Government for Citizens State Corporation (hereinafter referred to as the State Corporation, PSC).
Let us remind you that people who have reached the generally established retirement age can receive an old-age pension: men upon reaching 63 years of age, women upon reaching 61 years of age in 2024. Pension benefits from the UAPF are made until pension savings are exhausted.
It is worth noting that in order to provide proactive services for paying pension benefits from the UAPF to persons who have reached retirement age, have pension savings in the UAPF and have not applied for their payment, the UAPF conducts an annual reconciliation together with the State Corporation to determine whether these citizens have assigned pension payments by age and state basic pension payment from budgetary funds.
Based on the results of the annual reconciliation, when identifying persons who have assigned pension benefits from budgetary funds, the UAPF makes pension benefit payments to them within the framework of the relevant agreement concluded with the State Corporation.
4. What are voluntary pension contributions? How to list them correctly?
Within the framework of the funded pension system in Kazakhstan, the following types of contributions are made: compulsory mandatory (10% of the employee’s income, paid monthly by the employer), compulsory occupational pension contributions (5% of the income of workers in harmful and dangerous professions, which are paid from the employer’s budget), and also employer compulsory pension contributions (ECPC) from 2024 for all employees born in 1975 and later (from 1.5% in 2024 with a gradual increase to 5% in 2028). There are also voluntary pension contributions (VPC), which can be made by both individuals and legal entities. Individuals contribute funds for themselves and (or) for their loved ones at the expense of their income, and legal entities - for the benefit of their employees and (or) third parties. It is worth noting that citizens pay VPC on their own initiative, independently setting their size and frequency. This is one of the advantages of this type of contribution.
Voluntary pension contributions can be transferred through second-tier banks, Kazpost, as well as by submitting an application to the employer, on the basis of which he will transfer them to the UAPF in favor of the declared person. The procedure for receiving pension benefits at the expense of VPC is determined by the beneficiary independently in accordance with the pension rules of the UAPF.
To conclude an agreement and open an individual pension savings account (IPSA) for VPC, there is no need to visit the UAPF office - the VPC IPSA opens automatically upon receipt of the first contribution. The opening of an individual self-registration system for registration of DPs is carried out without application on the basis of:
- lists of individuals submitted by agents to the UAPF when transferring VPC;
- a primary contribution received to the UAPF from an individual in his own favor or in favor of a third party when transferring VPC.
Identification of the individual in whose favor pension contributions are made occurs thanks to personal data (full name, IIN, date of birth) specified in the electronic format of the payment order when transferring VPC. The UAPF receives all necessary information about the details of a valid identification document of an individual, place of permanent residence and other information from the relevant information systems of government bodies.
5. Do voluntary pension contributions have tax advantages? To what extent can they be transferred to IPM and how to do it?
Yes. In Kazakhstan, voluntary pension contributions enjoy tax advantages. For example, VPC transferred by the employer in favor of the employee are not considered as income of an individual; for the employer, such expenses are subject to deduction when calculating corporate income tax. That is, the employer in this case receives tax benefits.
Voluntary pension contributions, as well as all types of compulsory ones, are invested and generate income for contributors. By default, pension assets are managed by the National Bank of the Republic of Kazakhstan. However, contributors have the right to transfer their pension savings to investment portfolio managers (IPMs), who offer different investment strategies with different levels of return and risk. And if compulsory and compulsory occupational pension savings can be transferred to IPM up to 50%, then voluntary pension savings can be transferred to management in full. The transfer of IPM savings occurs upon the contributors’s application, which can be submitted in electronic format in his personal account on the fund’s website or at any UAPF branch. Based on the investment results, you can change the management company, but not more than once a year. Thus, participation in the management of pension assets is another advantage of DP.
Also the amount of pension savings from all types of contributions can be easily controlled 24/7 in your personal account on the website enpf.kz.
UAPF JSC reminds that the timely decision by the investor to transfer voluntary pension contributions (VPC) will help to significantly replenish his pension capital and receive higher benefits in the future.
