Previously, it has not been customary for us to recognize the the medium and long term problems that may arise in pension support. However, the President of Kazakhstan, Kassym-Zhomart Tokayev, in his first message to the people of Kazakhstan, directly highlighted them.
Firstly, it is the introduction of an additional 5% tax of pension contributions to ensure the stability of the pension system, which may be at risk in the medium term, in 10 years. By the way, in the Covid period, this weight on employers was temporarily taken in order not to kill the SME that was already in serious condition. Secondly, it is about the possibility of using pension savings on the real estate purchase or other purposes.
People in Kazakhstan believed, and this was often discussed on social networks, that the pension fund money was spent incorrectly, that it was spent for the wrong purposes, and it would be better to spend it now in order to improve, for example, living conditions. But the government realized that if it allowed the withdrawal of these savings from the pension fund today, then in the future it would induce a further pension insecurity for those people who had little savings in their accounts.
It is possible now to find out the “sufficiency threshold”, that is, determine the amount that should remain on the pension savings account and the amount of funds that can be received after the IIT payment in personal account on the UAPF website. This amount, with the exception of the inviolable one, will be annually approved by the Ministry of Labor and Social Protection of the Republic of Kazakhstan, and the size of which varies depending on age, can be used to buy housing, improve housing conditions, pay for medical treatment, and also invest in securities on the stock market.
Most likely, the savings will be withdrawn by Kazakhstanis to solve the housing problem mostly.
In November 2020, the number of registered housing purchase and sale transactions, according to the Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan, was less than 30 thousand and decreased by 9% compared to October. The number of housing purchase and sale transactions in January-November 2020 decreased by 5.6% compared to the corresponding period last year. Resale prices of secondary living space exceeded 224 thousand tenge per sq.m. and increased by 1.6% in November 2020, new housing prices amounted to about 306 thousand tenge per sq.m and increased by 0.1%. Rent of secondary housing increased by 0.4% to 1.62 thousand tenge per sq.m.
Though the demand for residential real estate increased by a third in Kazakhstan in 2019, during quarantine and emergency it fell by three quarters and began to adjust only in June. The mortgages shrank, according to Halyk Finance, the figure fell by a fifth in January-May 2020, while the loan rate increased slightly from 8.1% a year earlier to 8.3%.
If a person decides to use part of his pension savings to solve the housing issue, he has to contact Otbasy Bank JSC, which is appointed an authorized operator. The entire procedure of withdrawal takes place there.
Having learned on the UAPF website how much money can be withdrawn, the fund's depositor will have to register on the especially open Otbasy Bank online platform. He will be able to make several decisions: use the entire amount at once, divide it into several purposes, or maybe divide it into several operations, for example, if such a large amount allows: pay something partially, and later take a new mortgage. Otbasy Bank is flexible in the rules. Let’s say, it will be possible to spend one third of the amount for the current mortgage paying off, second – for the residential building development, and third - for the new mortgage down payment.
The depositor indicates what he wants to use his savings for on the online platform. Then, he has to open a special current account with Otbasy Bank for one-time compensation payments in the same place.
This account is legally protected from third parties: claims of private contractors, issues related to divorce proceedings, and others.
The rules for the use of pension savings for medical treatment were developed by the Ministry of Health of the Republic of Kazakhstan, for housing - by the Ministry of Labor and Social Security of the Republic of Kazakhstan.
When money comes to the account, the depositor will have 45 working days to complete all documents confirming the intended use: either pay off the mortgage, this will be the simplest operation, or take a new mortgage.
With the help of the special account, that can be opened both online, by video call, or in a bank branch, the targeted use of the withdrawn savings will also be monitored, the head of Otbasy Bank pointed out.
This bank option will be valid all the time, and in 2022. The first day of the portal operation and the special accounts opening will depend on several factors.
Photos are from open sources.