The sooner you start forming the retirement capital, the more likely you will have a solid financial capability for your future life by retirement. Foreign professional financial advisers make sure to include annuity programs in pension plans (receiving a guaranteed monthly rent from capital until the end of life), i.e. additional pension paid by the insurance company.
“In case of accumulation of sufficient funds in the pension fund under the retirement annuity program and reaching a certain age, a person is given the opportunity to transfer savings from the pension fund to a life insurance company. Monthly payments of pension savings are made for life and begin from the moment the annuity agreement is concluded, without waiting for the retirement age,” says Galym Amerkhodzhayev, the Board Chairman of LIC State Annuity Company.
The beginning of duration of guarantee is the moment of the first payment to the annuitant under the contract. If the annuitant dies before the end of the guaranteed period, the period during which the client has already received payments is deducted from the set period. The insurance organization will continue to make payments to the heirs during the period determined by the difference.
“For example, if a person issued a retirement annuity with 15-year duration of guarantee and passed away 5 years after the start of receiving payments, then the life insurance company, according to the concluded agreement, would continue to make payments to heirs for the remaining 10 years,” explains the interlocutor. Unlike the system of accumulating funds in a pension fund, payments under the retirement annuity program start before retirement age and are made for life. If the amount of monthly payments from the pension fund decreases annually and payments stop by the age of 80, the amount of payments on retirement annuity increases annually by 5%, and payments are made for life.
Thus, the basic benefits of retirement annuity programs are determined as follows:
● Early access to pension savings (women from 52 years old, men from 55 years old - in 2021);
● Lifetime payouts;
● Annual indexation of monthly payments by 5%.
“The terms of a retirement annuity agreement are practically identical in all life insurance companies; the draft agreement is approved by the legislation of the Republic of Kazakhstan. We recommend the client to check how many years the entire amount transferred from the pension fund will be paid to him and, set the guaranteed period for his retirement annuity agreement in accordance with this indicator,” clarifies the Board Chairman of LIC State Annuity Company.
It is also worth noting that the National Bank publishes data on the implementation of prudential standards by insurance organizations on a monthly basis, which determine the level of stability and reliability of each life insurance company. “Moreover, according to officially published data, you can monitor the financial condition of each individual organization on a monthly basis, including the condition of its reserves and assets. Having analyzed the official data of the state financial regulator, you will be more prepared to choose an insurance organization for a retirement annuity,” concluded Galym Amerkhodzhayev.
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