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Freedom Finance Life was the first to launch a devaluation-protected retirement annuity program

Thanks to this program, the retirement annuity company clients will be able to receive a copayment for the US dollar fluctuation.
Freedom Finance Life was the first to launch a devaluation-protected retirement annuity program

Retirement annuity is a program through which Kazakhstanis can receive pension payments earlier than expected. Men will be able to retire at the age of 55, women – 51. To do this, one needs to save a necessary amount on the pension account, and then buy a retirement annuity agreement from a life insurance company. The minimum amount to be saved is 10,001,551 tenge for men and 13,695,035 tenge for women.

Freedom Finance Life, a life insurance company, has launched a new program – retirement annuity with payment at the US dollar rate to protect pension payments from the national currency depreciation. It will not only allow Kazakhstanis to retire earlier than their official retirement age, but also receive an additional payment for pension payments if devaluation occurs and the US dollar rises.

“The appreciation of the US dollar affects the quality of life of most Kazakhstanis. Our company has developed a unique program to lighten the impact of devaluation for annuity insurance clients, through which they can receive more in tenge. This is the first program of such kind, and, we are sure, it will find its audience.” - commented Azamat Yerdessov, the Board Chairman of JSC LIC Freedom Finance Life.

How it works

In order to protect the pension from devaluation, an addendum to the retirement agreement must be concluded for 5 years. It does not affect the main contract value.

Upon retirement, you start receiving regular payments from a life insurance company. This money is paid throughout life even if their amount exceeds the UAPF savings that you have transferred to purchase an annuity agreement.

If devaluation occurs and US dollar rises, the company will pay an additional amount at the US dollar rate. Its size is equal to the difference (if any) between the amount specified in the addendum and the annuity payment size. The amount specified in the addendum is equal to the equivalent of the first payment in US dollars.

Example

Let us assume, you decide to retire early. The life insurance company transferred the first pension payment of 100,000 tenge. According to the exchange rate at that time (385 tenge) it is 259.74 US dollars. This amount is fixed in the addendum and becomes a basis for following payment calculation. Therefore, even if devaluation occurs and USD value grows, all of the following pension payments will not be lower than $259.74.

Suppose, there is devaluation next month and dollar has risen to 400 tenge. Your pension has not changed - 100,000 tenge. However, in dollar terms, this is no longer $259.74, but $250, less than last month.

If you had a regular retirement annuity contract, the life insurance company would continue to pay you 100,000 tenge throughout your life, even if the value of dollar changed. However, with the Freedom Finance Life agreement you will receive an additional payment. The size of this payment is the difference between the first pension and the following one: $259.74 - $250 = $9.74, in tenge it is 3,896.1 tenge.

Let us assume that next year the dollar exchange rate changes again and becomes 430 tenge per US dollar. Your pension has been indexed and become 105,000 tenge.

The US dollar equivalent to 100,000 tenge has become even less - $244.19. The size of copayment is $15.55 or 6,688.31 tenge. Thus, your pension will amount to 111 688.31 tenge.

Copayment calculation  

Amount of payment under retirement agreement

Dollar exchange rate on the payment date

Equivalent amount of insurance benefit in US dollars at the dollar exchange rate on the payment date

Copayment in US dollars

Copayment in tenge

Total the client receives in tenge

 

100,000 tenge

(first payment)

385 tenge/dollar

 

$259.74

   

100,000 tenge

 

100,000 tenge

400 tenge/dollar

$250.00

$9.74

3,896 tenge

103,896.1 tenge

 

105,000 tenge (payment with indexation 5%)

430 tenge/dollar

$244.19

$15.55

6,688.31 tenge

111,688.3 tenge

 

Details of the program are on website: https://ffin.life/pension_dollar

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