“The strategic area is the insurance system development, which will be aimed at stimulating productive and formalized employment. The main trend of the proposed changes is: firstly, the participation of the state, employers and employees in the system; secondly, strengthening the relationship between the experience of participation and the size of social payments. This means that compensation for lost income in the event of risks will be made to a greater extent at the expense of the accumulated pension and insurance assets of citizens,” the MLSPP executive noted.
The minister noted that today the share of state payments prevails both in the pension system and in the system of compulsory social insurance. Most of the population still believes that only the government must be responsible for their welfare.
“Despite the mandatory pension and social insurance systems, coverage remains low where private insurance companies operate. Not only the self-employed but also a certain part of employees remain uncovered.
If we disregard the upper income limits, then their levels, from which pension contributions and social contributions are deducted, also differ. The median income from pension contributions is 20% lower than the average monthly salary in the economy.
“Large employers and employees in hazardous industries draw attention to high insurance rates, low payouts from life insurance companies and the lack of transparency of the activities of insurance companies,” Tamara Duisenova said, stressing that failure to take measures could lead to issues of trust and financial stability of the system in the future.
The minister said that, together with the UAPF, the State Social Insurance Fund, the State Annuity Company and insurance companies, large-scale outreach work will be carried out and KPIs will be determined for each institution in terms of growth of the number of system participants.
A gradual increase in the size of pension and insurance payments linked to the length of participation in the system will also continue.
“The amendments to the pension system adopted last year, according to the order of the head of state, will allow providing citizens with pension in the amount of at least 40% of their previous income. The increase has started from pensioners receiving the minimum amount of basic pensions in the first place. This year, the basic pension in this category of pensioners has been raised to 21%. A phased increase will be carried out over 5 years, that is, from 2023 to 2027, which will make it possible to cover last year's inflation and its forecast corridor for subsequent years.
The same work will be carried out in the social insurance system. This year, social payments for job loss will be increased to 45% of the previous income,” the MLSPP executive noted.
In conclusion, Tamara Duisenova informed that as of 2024, mandatory pension contributions from employers will be introduced to form a Notional Defined Contribution Pension System for young contributors.
In addition, in order to improve the efficiency of the Defined Contribution Pension system, the depositors will be given the right to transfer 50% of their pension savings to private management.
Photos are from open sources.
