BAKU, Azerbaijan, June 6. The Unified Accumulative Pension Fund (UAPF) of Kazakhstan has increased the thresholds for the minimum adequacy of pension savings, Trend reports, citing the fund.
According to the UAPF, the minimum pension adequacy (MPA) levels have grown by 79% or more, depending on the age of the contributor: the closer to retirement, the higher the required amount on the pension account. For people nearing retirement age, the MPA has more than doubled.
“This means that pension savings will remain in their accounts, continue to be invested, and pension payments will increase significantly. Under the previous methodology, post-withdrawal payments would have been about 15% of the median salary; under the new methodology, they are approximately 40% of the median salary,” the UAPF said.
Under the new methodology, MPA amounts are determined based on target future pension payments and calculated for each contributor’s age using a standard present value formula for monthly payouts.
At the same time, the right to use part of pension savings for alternative purposes, such as housing and medical treatment, remains. Pensioners whose pension reaches at least 40% of lost income can withdraw up to 50% of their savings for these purposes. Full use of remaining pension funds is allowed for citizens with a pension annuity contract and for retirees receiving length-of-service pensions from the state. The possibility to use savings beyond the minimum adequacy threshold also remains.
“Updating the thresholds for minimum pension savings adequacy is primarily aimed at protecting the long-term interests of contributors. Pension savings are not a regular deposit or a source of funds for current expenses. Their main purpose is to ensure a person receives stable payments after retirement,” the Ministry of Labor and Social Protection of the Population commented.
