The Unified Accumulative Pension Fund (UAPF) explained why the sufficiency threshold for a 20-year-old person was raised to 6 million tenge. This was reported by Qazaqyia.kz citing Sputnik Kazakhstan.
Fund specialists acknowledge that it is impossible to accumulate such an amount at age 20. However, pension contributions made at the beginning of one's career can be invested over a long period. As a result, the highest investment income is generated through compound interest. Therefore, early withdrawal of pension savings significantly reduces future pension benefits.
"The calculation of the minimum sufficiency threshold is based not on the contributor's current income, but on the target pension amount they should receive in the future. This is the minimum amount that must be in the pension account at a certain age. It should ensure sufficient payments in old age, provided that contributions are not made before and after retirement age," the specialists said.
For example, if a contributor is 20 years old, they have approximately 40 years until retirement. During this period, savings should be invested and generate additional income. "If for any reason a citizen stops paying pension contributions, funds in the account exceeding 6 million tenge, through investment income, will allow them to receive payments corresponding to the minimum pension standard until retirement age," the official statement said.