Currently, Kazakhstan has a multi-level pension system, consisting of a basic, mandatory and voluntary level.
the first level(basic ) – the state basic pension payment (the republican budget);
the second level(mandatory) – pensions from the solidarity system (the republican budget) and the Unified Accumulative Pension Fund at the expense of mandatory pension contributions, mandatory professional pension contributions;
third level(voluntary) - payments from voluntary pension contributions.
At the basic level, a state basic pension benefit is provided, which is granted to citizens, as well as to persons permanently residing in the territory of the republic, when reaching the retirement age and is carried out regardless of the receipt of a solidarity and/or funded pension.
The recipients of the state basic pension benefit are more than 2 million people.
In the implementation of the Address from July 1, 2018, the methodology of its granting was changed. It will be granted depending on the length of participation in the pension system.
The new mechanism for granting a basic pension is as follows:
Its size, with the participation in the pension system of 10 years or less, or its absence, will be equal to 54% of the subsistence level (SL).
For each year, worked over 10 years, the basic pension increase by 2%. For example, the experience of 20 years – the basic pension of 74% of the PM, worked 30 years – the basic pension – 94% of the PM, with an experience of 33 or more years, the basic pension will amount to 100% of the PM.
At the same time, the length of participation in the pension system include:
- work experience, worked out before January 1, 1998,
- accumulative experience (actual experience of payment of pension contributions) after January 1, 1998;
- other socially significant periods (caring for a child under 3 years - (within 12 years), periods of care for the disabled person of the first group, lonely disabled person of the second group and old-age pensioner who need outside help, as well as for an elderly person who has reached eighty years of age, and disabled from childhood to 16 years, residence time for spouses of military personnel, employees of special agencies, diplomatic workers, etc (not more than 10 years in total).
The new method of granting a basic pension corresponds to the principle of social justice, since not only it help to improve the financial situation of pensioners, but also serve to strengthen labor motivation and formalization of labor relations of citizens. That is, the longer a person works, the more he has a pension (both accumulative and basic).
The second level (mandatory) is:
1) solidary pensions paid out of the republican budget with a working experience of at least 6 months, depending on the length of service worked out as of January 1, 1998;
2) payments from a Unified Accumulative Pension Fund (hereinafter referred to as the UAPF) due to pension savings of employees.
When granting a solidarity pension by age, the length of service is taken into account only until January 1, 1998, as from that date the transition to a funded pension system that involves transferring mandatory pension contributions to a Unified Accumulative Pension Fund by all employees began.
For the length of service after January 1, 1998, pension payments are made from the UAPF, based on individual pension savings formed from mandatory pension contributions, mandatory professional pension contributions.
In accordance with the Law, the calculation of the size of pension payments by age is based on the average monthly income for any 3 consecutive years, regardless of the breaks in work since January 1, 1995. At the same time, the average monthly income for the period from January 1, 1998 is set according to the income from which mandatory 10 percent pension contributions were made to the UAPF.
The law provides for the limit of the average monthly income (AMI) for calculating a solidarity pension (taken into account within a 46-times monthly calculation index), established annually by the law on the republican budget), and limiting the maximum pension payout (75% of AMI).
In accordance with the Concept for the Further Modernization of the Pension System of the Republic of Kazakhstan until 2030, approved by the Decree of the President of the Republic of Kazakhstan of June 18, 2014 No. 841, to maintain the size of solidarity pensions at an acceptable level, their amounts are annually indexed with inflation two percent ahead of inflation.
Pensions from the accumulative pension system
With the transition to a funded pension system that provides for the transfer of mandatory pension contributions by all employees, with each employer obliged to carry out a regular transfer of OPV in the amount of 10% of the monthly income of the employee (not more than 75 times the minimum wage) to the employee's individual retirement account opened in the UAPF.
In accordance with Article 31 of the Law, persons who have pension savings in the UAPF have the right to pension payments:
1) when reaching the retirement age – 60 years for women/63 years for men;
2) if pension accumulations are sufficient to ensure payment not less than the minimum pension, men at the age of 55 and women – 52 years 6 months by concluding a pension annuity contract;
3) disabled persons of the first and second groups, if the disability is established for indefinite period;
4) foreigners and stateless persons who have left the country for permanent residence outside the Republic of Kazakhstan, who have submitted documents confirming the fact of departure.
Pension payments from the UAPF from January 1, 2018 are carried out on a monthly schedule and are defined as one twelfth of the annual amount of pension payments calculated in accordance with the Method for calculating the amount of pension payments, as well as establishing the minimum monthly pension payment from the UAPF of at least 70 percent of the subsistence level established by the law on the republican budget for the corresponding financial year.
The right to withdraw "at a time", that is, only those persons whose total pension savings do not exceed 12 times the minimum pension can receive a pension payment from the EPPF (in 2020 - 463 632 tenge).
In the event that the balance of pension savings on an individual pension account after the next monthly payment is less than 70 percent of the subsistence level, this balance paid along with the amount of the regular payment.
Introduced from January 1, 20186 in the procedure for the implementation of pension payments from the UAPF, the changes contribute both to an increase in the size of the aggregate monthly pension payments from budgetary funds and from a funded pension from the UAPF, and the duration of monthly payments from the UAPF.
Since October 2018, the procedure for processing pension payments has been simplified.
The assignment of 3 types of payments (joint, basic and funded pensions) is provided on the basis of one application and one package of documents (the so-called composite service), and the payment of state guarantees is made in a non-requesting manner (proactive format).
The third level (voluntary) – payments at the expense of voluntary pension contributions.
Voluntary pension contributions – money contributed by investors on their own initiative to the UAPF and (or) a voluntary accumulative pension fund for themselves or by third parties. Their rate, the period of payment are determined by the contract on pension provision at the expense of voluntary pension contributions.
Contributors of voluntary pension contributions is a natural or legal person that makes voluntary pension contributions at its own expense.
In general, voluntary level of pension provision stimulates personal responsibility of citizens for pensions.
Thus, the current model of pension provision is oriented to the personal responsibility of each citizen for his future pension provision.