Who and how much pension savings can use
Kazakhstanis can spend their pension savings on housing condition improvement and medical treatment. According to rules, the amounts they can withdraw from their individual retirement account (IRA) are the following:
- for depositors who have not reached retirement age - savings formed from compulsory and compulsory professional pension contributions (CPC and CPPC) and exceeding the sufficiency threshold;
- for retirees - up to 50% of the amount of pension savings formed at the expense of CPC and CPPC;
- for depositors who have entered into a retirement annuity agreement - the balance of savings in the UAPF formed at the expense of the CPC and CPPC.
Let us note that the investment return accrued is also a part of pension savings.
Retirement annuity and use of savings
Everything is clear with depositors who have accumulated enough money in their retirement accounts, they can use all above the sufficiency threshold. And those who applied for a retirement annuity also had enough savings, but they spent them on insurance premium.
Retirement annuity is an insurance product that allows UAPF depositors to transfer their pension savings to a life insurance company in order to receive life payments; you can do this even before retirement age.
One also needs to accumulate a certain minimum to apply for a retirement annuity. In order for payout to be larger, some depositors could spend a higher amount of savings.
For instance, in order to receive the minimum payments, the depositor had to transfer about seven million tenge from the IPA to the insurance company, but he transferred 10 million so the payments were larger, although he could use this balance of three million tenge for housing or medical treatment.
There is currently no way to return and use such surpluses, but it will soon be possible, thanks to amendments in legislation.
How can I return money to the UAPF and withdraw it?
In particular, the amendments, which will come into force in mid-September, imply that persons who have entered into a retirement annuity agreement, have the right to refer the insurance organization with the application to change the agreement terms by reducing the amount of insurance payments and return money to the UAPF not earlier than two years from the date of the agreement conclusion.
The amount to be returned to the Unified Accumulative Pension Fund is equal to the difference between the redemption amount and insurance premium current on the date of the amendments.
According to Clause 60 of the Law “On Pension Provision in the Republic of Kazakhstan”, the redemption amount must be no less than the amount of pension savings previously transferred from the UAPF to the insurance organization minus insurance payments already made and the insurance organization’s expenses for case administration.
And the insurance premium amount, which should remain with the insurance company, is calculated in a new way, taking into account the current age of the depositor and minimum sufficiency.
Thus, if the depositor transferred all his pension savings from the UAPF to the insurance organization, with the introduction of amendments to the law, he will be able to recalculate, reduce payments on the insurance annuity, return the balance to the UAPF and use it to improve housing conditions or for medical treatment.
Photos are from open sources.
