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Who needs a retirement annuity?

Life insurance annuity is a saving tool that gives its owner a guaranteed income at the advanced age. Below we share to whom this product will do.
Who needs a retirement annuity?

The insurers' programs are designed for people who have reached the age of 45, as well as 40-year-olds employed in industries with hazardous working conditions, whose mandatory professional pension contributions have been paid to the UAPF by their employers for at least 60 months. “For instance, it is necessary to have at least 6.15 million savings in the UAPF for 45-year-old men to conclude a contract, and at least 6.7 million tenge - for 55-year-old men. A 45-year-old woman has to have at least 7.7 million savings in the UAPF to conclude an agreement,” explains Kairat Chegebayev, the Board Chairman of Nomad Life.

The age of clients and amount of savings required for concluding retirement annuity agreements were reduced this year, that is, the product became available to a larger number of UAPF depositors. “Monthly payments can be received by men who have reached the age of 55 and women at the age of 52, since the year beginning it has become possible to conclude a deferred retirement annuity agreement for persons who have reached 45 years old, - says Gulmira Ubegaliyeva, the Board Chairman of LIC Eurasia. - A retirement annuity is a good tool for ensuring financial independence in adulthood, since the product guarantees a lifetime income and protects the consumer from the investment risks as well as survival and inflation risks.”

When a client enters into a retirement annuity agreement, he transfers the accumulated money from the UAPF to a life insurance company. “Then the company's specialists have to calculate the amount of monthly payments for the client to receive. They take the amount accumulated by the client, statistical data and various formulas as a basis,” Azamat Yerdessov, the Board Chairman of Freedom Finance Life informs.

“The methodology for calculating the monthly payment amount is regulated by the resolution of the NB RK. Insurers calculate payments up to the age of 110 years according to the indices given in the mortality table. The specified age limit conventionally denotes the fact that the payment is made to the client for life. Thus, if the annuitant survives to 111 years and older, the payments will be still made according to the established payment schedule under the agreement,” adds Zhanar Zhubaniyazova, the Chairman of the Board of Halyk-Life.

What income can a retirement annuity provide?

Monthly payments under such annuity agreements cannot be lower than 70% of the subsistence level. “One of the advantages of the retirement annuity agreement is the annual indexation of payments by 5%, which, however, does not depend on work efficiency of a separate insurance organization, the requirement for the mandatory indexation is established at the legislative level, thus, the payments will increase annually in any case,” says the Nomad Life executive.

Keeping savings is not an easy task today. Inflation is the main problem for those trying to save money for old age. “Indexation guarantees the growth of return, and also helps avoid serious inflationary losses. Thus, insurers support the purchasing power of older people for life,” emphasizes Galym Amerkhodzhayev, the Board Chairman of the State Annuity Company.

Income sources

When a person enters into a retirement annuity agreement, he starts getting pension from three sources upon reaching the retirement age:

1. Annuity payments from a life insurance company;

2. The UAPF payments;

3. State pension (if you have work experience before 1998).

“Investors love to say, 'Don't keep all your eggs in one basket.' Relying only on your job earnings means risking everything due to lack of diversification. Several sources of income make you much stronger in case of unforeseen circumstances,” emphasizes Gulmira Ubegaliyeva.

“Our clients, married couples often live on one or two sources of income, and they spend the third income once a year on vacation with their grandchildren. Such help can significantly brighten up the “golden” years,” Azamat Yerdessov believes.


The law provides for a guaranteed period for making payments under retirement annuity agreements. “The guaranteed period is a term during which the insurance company is obliged to make annuity payments, regardless of whether the annuitant is alive or dead in this period. This means that if the client specified a guaranteed period in the retirement annuity agreement, in the event of his death during this period, the payments will continue to be made to the beneficiaries or heirs of the annuity until the end of the guaranteed period,” Zhanar Zhubaniyazova said.

The guaranteed period starts from the moment of the first payment made under the contract to the client. “For example, if a person has entered into a retirement annuity agreement with a 20-year guaranteed period and passes away 5 years after the start of receiving payments, the life insurance company will continue to pay money under this agreement to heirs for the remaining 15 years,” concluded Galym Amerkhodzhayev.


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