Starting next year, Kazakhstan's pension system will change. Experts are considering three main proposals for pension reform. One of them will be selected and approved by law. From the new year, pensions of Kazakhstanis may be calculated using a new method. This was reported by Qazaqyia.kz citing Sputnik Kazakhstan.
Insurance fund proposal
The State Social Insurance proposes introducing a social pension payment. It will be calculated based on two indicators: a person's average monthly income relative to the median wage, and the length of participation in the pension system, i.e., work experience. Thus, a person's future pension will not be limited to the money accumulated in their individual account. The pension will be paid according to each person's work experience and average income. Therefore, the longer the work experience and the higher the previous salary, the higher the social pension payment.
UAPF initiative
The Unified Accumulative Pension Fund also submitted its proposal to the working group. According to it, the current mandatory pension contributions of employers should be collected using the "4+1" formula. Specifically, it is proposed to allocate 4 percent of contributions to employees' individual accounts, and another 1 percent to a conditional account. Currently, all this money is collected in a separate account. If the UAPF initiative is implemented, in addition to the 10 percent pension contribution deducted from employees' salaries, the employer's 4 percent mandatory contribution will be transferred to the individual account. Thus, monthly contributions will be 14 percent instead of 10 percent. Another 1 percent paid from employers' funds will continue to accumulate in the general insurance account. According to current calculations, the money accumulated in the individual account may run out by age 80. After that, the funds accumulated from the 1 percent contributions will allow for a lifelong pension. It is worth noting that today the employer's mandatory pension contribution from their own funds is 3.5 percent of salary. Next year, this figure will rise to 4.5 percent.
Singapore model
The working group on pension reform is also discussing the Singapore model. There, pension contributions are distributed into three different accounts: Ordinary account (for housing, insurance, and education); Special account (funds not spent until retirement and used as investments); MediSave account (for hospital and insurance expenses). Experts say implementing the Singapore model will be difficult because pension contributions there reach 37 percent. Of this, 20 percent is paid by employees themselves, and the rest by the employer. With such amounts, money in the three accounts accumulates quickly. In Kazakhstan, with 13.5 percent (10 percent from employees and 3.5 percent from employers), it is difficult to accumulate money separately.
Senator's proposal rejected
Earlier, the working group also considered a proposal from ex-senator Amangeldy Nugmanov. Currently, in the defense, internal affairs, and special agencies, employees are allowed to retire after accumulating a certain length of service. Nugmanov proposed introducing the same system universally.