UNPF reboot. Tamara Duisenova talks about pension system prospects

Deputy Prime Minister of the Republic of Kazakhstan Tamara Duisenova took part in a high-level international round table organized in Almaty as part of the celebration of the 25th anniversary of the funded pension system of Kazakhstan.

In her speech, Tamara Duisenova noted that Kazakhstan was the first CIS country to move to a funded pension system based on the principles of individual savings.

Thus, at the first stage of the system participants were only employees, contributing 10% of their income. Today, the total amount of their savings exceeds 16 trillion tenge. At the second stage - since 2005 basic pension payments from the budget were introduced. As a result, a second participant in the system, represented by the state, appeared.

"With the adoption of the Social Code this year, a third subject of the system appeared - the employer. Already from the beginning of next year, they will start making contributions in favor of their employees. Thus, we have formed a multi-level national pension system," Tamara Duisenova said.

At the same time, she emphasized that not all issues of pension provision have been resolved. First, it concerns demographic changes: according to forecasts, by 2030, the number of pensioners will increase by 30% and reach 3 million people.

"However, due to the youth of the system, the size of the funded pension is not so large. In this regard, within the framework of the Social Code, we have provided parametric changes to increase the size of pension payments at the expense of the state. That is, the state has assumed responsibility for the pension provision of our citizens at the transition stage from the state to a multilevel system," she said.

Secondly, the problem of coverage of self-employed citizens by the funded pension system remains. To ensure social protection of this category of citizens, based on the experience of the OECD countries, the concept of "independent worker" was introduced, mechanisms for regulating platform employment were defined, and a single payment was introduced, combining all social contributions for micro and small businesses.

"We expect that this will allow to legalize the work of more than 500 thousand citizens and ensure their right to social security, including pension," the Deputy Prime Minister stressed.

Thirdly, the issues of profitability of pension savings are becoming more and more relevant. In particular, to this end, the depositors of the UNPF since July 1 have been granted the right to participate in the management of their savings by choosing an alternative policy of investing up to 50% of their savings to obtain a higher investment yield.

"It should be noted that Kazakhstan is a country that at the legislative level has undertaken an obligation to ensure the safety of pension savings in the UNPF. When citizens transfer their savings to private management, their safety will be ensured by the companies managing them," Tamara Duisenova emphasized.

As the fourth point she identified the issues of citizens' confidence in the pension system and the culture of accumulation. According to Deputy Prime Minister, here it is necessary to reboot the work of all social institutions involved.

"First of all it concerns the UNPF. It is not enough for the Fund to be only an accounting center, accumulating on its accounts pension savings of citizens. It should, on the one hand, become a strong social institution, whose work is aimed at encouraging citizens to participate in the pension system, and on the other hand - a financial institution with a highly profitable investment strategy, allowing to multiply the savings of citizens," Tamara Duisenova concluded.

Leading foreign and Kazakhstani experts took part in the round table. Thematic reports were also made by Madina Abylkasymova, Chairman of the Agency of the Republic of Kazakhstan on Regulation and Development of the Financial Market of Kazakhstan on the stages of development of the pension assets management system in Kazakhstan; Vitaly Tutushkin, Deputy Chairman of the National Bank of Kazakhstan, on the main challenges of financial sustainability and adequacy of pension provision in Kazakhstan; Bakytzhan Sagintayev, Member of the Board (Minister) for Economy and Financial Policy of the Eurasian Economic Commission, on pension provision in the EAEU integration area.

Several panel sessions were also held during the day, during which participants exchanged views on the following topical topics: "Population aging and pension reform", "Population coverage and awareness", "Investment strategies, risk management and supervisory regulation", "The future of social and pension security systems: prospects and key drivers of development".

In addition, within the framework of the conference T. Duisenova met with the President of the International Social Security Association Mohammed Azman. During the meeting they discussed key challenges in the sphere of social protection in the world and prospects for the development of national pension systems. The sides agreed to strengthen cooperation in the management of social risks and social security of citizens.

Deputy Prime Minister also held a meeting with Krum Markov, a specialist in social protection policy of the International Labor Organization.

#Social Security #Tamara Duisenova

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