Concept of further modernization of the pension system until 2030
The Concept of further modernization of the pension system for the period until 2030 (further – Concept) was approved by the Decree of the President of the Republic of Kazakhstan from June,18,2014 № 841. The aim of modernization of the pension system in the Republic of Kazakhstan is reduction of solidarity pensions and necessity for further diversification of pension payments, long-term demographic trends and a cycle of economic development, optimization of distribution of responsibility for pension between the state, employer and employee.
The purpose of the Concept is modernization of the pension system that would allow people of retirement age to have decent standards of living.
Modernization of the pension system is multilevel.
First level includes payments from the state budget (solidarity and basic pension payments/guaranteed minimum pension).
Second level includes payments due to obligatory pension contributions (further – OPC), obligatory professional pension contributions (further – OPPC).
Third level includes all payments from the occupational fund.
The goals of the Concept are to ensure financial stability, transparency of the pension system, expansion of the coverage of the population with the pension system as compulsory as occupational, diversification of incomes at the retirement age (state, private, professional, solidarity and accumulation), accessibility and quality of pension services, improvement of transparency of investment management of pension assets.
For implementation of the tasks, the work will be organized in the following directions:
1) at the basic level a mechanism of the state basic pensions will be improved in order to reduce poverty among pensions and to stimulate citizen’s participation in the pension system;
2) compulsory level is formed by 5% of employers’ contributions in favor of employees;
3) occupational level is formed due to occupational pension contributions of employees and/or employers.
The concept is planned for the long-term outlook.
The first phase of the Concept (2016 – 2020) will provide a legal basis and implement high priority measures aimed at modernization of the pension system:
– improvement of the system of guaranteed minimum pension in order to prevent poverty of pensioners and to stimulate an economic activity of citizens of a working age, it is proposed since July,1,2017:
- people of retirement age will receive a basic pension depending on the experience of citizen’s participation in the pension system;
- to grant a social pension at the rate of 50% of the minimum of subsistence (further – MS) for people with experience of participation in the pension system not less than 10 years;
- to grant a basic pension at the rate of 50% of MS, if people have the experience of participation in the pension system not less than 10 years. For each year over 10 years, the pension will increase by 2% and with length of service – 35 years and more, it will be amount to MS.
Recalculation of a base pension will be done for pensioners taking into account experience of participation both in the solidarity and accumulative systems that increase pension payments for pensioners, having a long record of service, but receiving small pension.
For citizens, retiring on a pension in the transition period – from solidarity to accumulative system (until 2030), a base pension will be granted taking into account:
1) their length of service to January,1,1998;
2) period of payment of pension contributions to the accumulative pension system after 1998.
Participants of the accumulative pension system at the retirement age (since 2030) will transit from a base pension to guaranteed minimum pension, if their pension benefits are below the minimum pension.
The second phase (2020 – 2030) presupposes the adoption of measures to increase the effectiveness of the modernized pension system. It will also improve the rights protection mechanisms of pension payments recipients and depositors, which is characterized:
1) improving the efficiency of the pension system;
2) further improvement of the system of minimum guaranteed pension, including transition from basic pension payments to minimum guaranteed pension that will optimize a mechanism of the state guarantee;
3) obligatory signing a treaty, provided life pension payments (pension annuity) only for participants of APS.
Implementation of the Concept allows:
- adequacy of pension payments and creation of a balanced financial stable pension system;
- by 2030 the accumulative pension system will cover to 80% of the employed population;
- safety of pension savings;
- optimization of government guarantees for pension savings.
Solidarity pension will be indexed annually ahead of the inflation rate by 2%.
If you have questions concerning the Concept of further modernization of the pension system in the Republic of Kazakhstan until 2030, you can address to the office of the State Center of Pension Payment in a place of residence, people of the regional center to the address: Pavlodar, Ak.Satpayev st., 44.