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Kazakhstan's population is aging: the share of elderly people in the country has reached 11%

According to the UN forecasts, Kazakhstan's population will be growing old over the next several decades and reaching about 24 million people by 2050. It has exceeded 19 million for the current year, according to RANKING.KZ.
Kazakhstan's population is aging: the share of elderly people in the country has reached 11%

Population growth is due to both the birth rate and increase of longevity. Thus, life expectancy at birth in 2020 was 71.37 years; ten years ago it was 68.45 years, and in 2000 - 65.5 years. This includes infant and child mortality, death at a young age, etc. Life expectancy after retirement is 80 years for men and 82 years for women.

Thus, the population ageing is observed in Kazakhstan. If the share of people of retirement age in 2010 was 9.9%, in 2020 it was already 11%. Meanwhile, the share of able-bodied population, on the contrary, has noticeably decreased: from 64% in 2010 to 58.3% in 2020.

The demographic load on one able-bodied person is also growing. For 1000 citizens of working age in the Republic of Kazakhstan there are 692 people younger and older than working age (a year earlier - 687, and ten years ago - 555 people).

With aging population and, accordingly, increase in load on able-bodied residents, there are global trends in the transition from a pay-as-you-go pension system to a funded-type system. Their ratio in 2019 was 53% (funded type) by 47% (pay-as-you-go), while in 2008 the funded system accounted for only 40%, in 2009 - 41%, and in 1999 - 31%. Over the past 20 years, the share of funded system in total pension assets has grown by 18 percentage points.

Kazakhstan has started a gradual transition from a pay-as-you-go pension system to a funded pension system since 1998. The transition corresponds to world experience; for example, such countries as Australia, Denmark, Sweden, Hong Kong, India, Chile, Indonesia, Singapore and many others can be referred to ones with a funded pension system.

Pay-as-you-go pension system is, in general, a scheme, in which payments to pensioners are made at the expense of the current income of working people (current tax revenues to the budget).

In the funded system, the working generation pays contributions that are not spent on payments to the elderly, but accumulated, invested, and, together with the return on investment, are subsequently used to provide pensions to those who have been saving.

One of the advantages of the funded system is that, by establishing a strict dependence of the pension size on pension contributions, it strengthens the responsibility of workers for the material security of their old age and, therefore, increases their interest in legalizing their income. This, in turn, has a positive effect on tax collection, reduction of shadow employment, and so on.

In general, the funded component of the multi-tier pension system of the Republic of Kazakhstan reduces the load on budget, as well as increases the size of the pension in the future.

As of September 1, this year, the pension savings of citizens of the Republic of Kazakhstan amounted to 12.9 trillion tenge, by 6% more than in the same period previous year. The main amount of pension savings was formed due to obligatory pension contributions (OPC) - 12.6 trillion tenge (5% growth over the past 12 months). The amount of pension savings on obligatory professional pension contributions (OPPC) was 342.6 billion tenge (17% increase of 17%), sum of pension savings on voluntary pension contributions (VPC) was 1.6 billion tenge.

In addition to the depositors’ contributions, a significant increase in pension savings was ensured thanks to the net return on investment, which amounted to 938.9 billion tenge for the period from January 1 to September 1, 2021 exceeding the figures for the same period last year by 8%, or 67 billion tenge.

In total, from the year beginning to September 1, payments by age to UAPF depositors amounted to 62 billion tenge.

Source: http://www.ranking.kz/ru/a/infopovody/naselenie-kazahstana-stareet-dolya-pozhilyh-lyudej-v-strane-dostigla-11

Photos are from open sources.

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