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How to go into retirement earlier?

Currently, insurance companies offer Kazakhstani people such product as the retirement annuity. It allows starting to get retirement benefits 8 years earlier and personally determine the amount of benefits and a term. Additionally, over the years, the amount of your benefits will be gradually increasing due to indexation up to 5-6% per year. It is possible to participate in three programs simultaneously: joint program, the program of UAPF and annuity program via the insurance program.
How to go into retirement earlier?


If benefit payments from the pension fund can end after 6-7 years, and they are not indexed, then the retirement annuity allows you to get life insurance benefits for the term of life using the savings formed by mandatory pension contributions according to the Act of the Republic of Kazakhstan “On retirement benefits” but only after entering into the agreement with the insurance company. Therewith, the entire amount of pension savings or a part of it, which is sufficient to enter into the agreement, shall be transferred to a life insurance company (LIC), it is the company, which is entitled to offer this product. To date, there are 6 companies of that kind. LIC guarantee lifetime benefit payments, their capital ensures such an option; these companies are supervised by the National Bank of the Republic of Kazakhstan and must fulfill its requirements. LIC guarantee the rate of return and indexation of payments for the entire period.

Opportunity of payment frequency choosing

A client of the company shall choose payments frequency himself. For example, once per year, every six months, once per quarter or monthly. Therewith, if you have entered into the Retirement Annuity Agreement and continue working, or if saving in the pension fund exceed the annuity value, then the surplus of funds may be left within the pension system. In this case, you will get pension benefits from both the insurance company and the pension fund. If you have a seniority for the period up to 1998, you will also be credited with joint retirement benefits. Thus, you will have benefit payments from three sources.

Going into retirement earlier

Those, who have reached the age of 55 (for men)/ 50 years (for women) can use the opportunity to apply for the retirement annuity. At the same time, the amount of their pension savings should not be less than KZT 9 103 543 (for men) and KZT 12 661 724 (for women).

This service is also available for those, who have already retired and accumulated more than KZT 7 337 576 (for men) and KZT 10 554 561 (for women) in the pension fund. If the age is suitable, but there is no the required amount on the account, those people, who wish to use the opportunity to apply for the retirement annuity, can credit the account with their own funds, that means with voluntary contributions.

Privileges for military and law-enforcement officers

By the way, the military and law enforcement officers have privileges in this matter, since, having gone into pension due to sufficient period of service, they are entitled to transfer 50% of the savings from the pension fund to LIC and get benefits under the annuity agreement. And with achievement of the retirement age they are entitled to transfer the remaining amount to LIC or leave it in the pension fund in order to get retirement benefit from there, as well. There are no limits regarding the minimum amount of savings for former military officers. Thus, even if they have KZT 500 thousand in the pension fund, they are entitled to transfer a half of the amount to insurance company.

Programs based on the client’s preference: for himself and for the heritors

There are two retirement annuity programs. Under the first one, you are suggested continuing to pay your retirement benefits even after your death to one of your heirs within the chosen guaranteed period, you shall specify to whom exactly such payments shall be made. The second program provides for lifetime retirement benefits payment only to you throughout your life with the established frequency under the agreement.

Under both, the first and the second program, insurance company manages your funds, multiplying them and earning due to interests. At the same time, unlike the UAPF, the amount of retirement benefits will grow monthly, regardless of whether the insurance company gets profit or not.

Where the insurers invest funds?

All insurance companies invest funds in those instruments, which are included into the list established by the regulator and comply with the requirements of the National Bank of the Republic of Kazakhstan regarding rating and diversification availability. Generally, they invest in deposits, bonds, shares, derivative financial instruments, precious metals, etc. However, let us repeat ourselves, the results of the company's investment activities are not of great importance for recipients of retirement benefits, since they must get their guaranteed rate of return in any case, which is included in the process of calculation of insurance benefits at the moment of the Retirement Annuity Agreement execution.

Within the process of a life insurance company choosing, pay attention to its good standing, operations experience in the insurance market and financial stability (the amount of assets and equity). The main data can be found on the website of the National Bank of the Republic of Kazakhstan in “Statistics” section. It is important that the main financial indicators of the insurance company can gradually increase, at least.


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