From January 2021, legislation came into force that provides citizens with the right to use part of their pension savings not only to improve housing conditions and (or) pay for medical treatment, but also to transfer investment management companies to investment portfolio managers (IPM).
The contributor's pension savings can be transferred to the management of IPM:
- in the amount not exceeding the difference between the actual amount of pension savings of the contributor to the UAPF and the threshold for the minimum sufficiency of pension savings; or
- in an amount not exceeding the balance of pension savings on the contributor's account with the UAPF, in the case of a concluded pension annuity agreement with an insurance organization, providing for life payments.
To transfer pension savings to one or several IPMs, a contributor must apply to the UAPF with an application. The application can be submitted through a personal account on the enpf.kz website or by personal contact to any regional branch of the UAPF.
UAPF transfers pension savings into the trust management of IPM within thirty calendar days after the date of receipt of the application from the contributor. The rest of the contributor's pension savings will continue to be managed by the National Bank.
Pension savings transferred to IPM Investment Management do not qualify as lump-sum pension benefit withdrawals (as in the case of housing and / or medical treatment withdrawals) and will not be subject to personal income tax at the time of transfer to IPM.
After the initial transfer of pension assets to the trust management of IPM, the contributor has the right to:
- no more than once a year submit an application to the UAPF for the transfer of their pension savings into trust management from one IPM to another IPM;
- submit to the UAPF an application for the return of pension savings held in trust by IPM to trust management of the National Bank (no earlier than two years after the initial transfer of pension savings to trust management by IPM).
Including 10 calendar days before the contributor reaches retirement age, the contributor's pension savings are returned to the investment management of the National Bank.
As of September 16, 2021, the investment portfolio manager transferred KZT 5.2 billion, the UAPF executed 2,707 applications. The average transfer amount is about KZT 2.0 million. Detailed statistics on the transfer of the year of pension savings to trust management are also available on the website enpf.kz in the section "Indicators" - "Transfer of pension savings to management companies".
At the moment, UAPF has concluded agreements on trust management of pension assets with four IPMs. You can get acquainted with information about them and study their investment declarations on the website enpf.kz in the section "Services" - "Register of investment portfolio managers". Note that from KZT 5.2 billion - 44.97% or KZT 2.3 billion was transferred to Jusan Invest JSC, 27.58% or KZT 1.4 billion to Halyk Global Markets JSC, 17.95% or KZT 0.9 billion in BCC Invest JSC, 9.50% or KZT 0.5 billion to Centras Securities JSC.
In the context of regions, more than half of the transferred funds to IPM fall on the two largest cities of Kazakhstan, Almaty and Nur-Sultan, 45.3% and 26.2%, respectively. The third place in the transfer of funds is for the Mangistau region with 5.5%.
Recall that after receiving pension assets from the UAPF, IPM invests them in authorized financial instruments specified in the Rules for the implementation of investment portfolio management activities, approved by the Resolution of the Board of the National Bank of the Republic of Kazakhstan dated February 3, 2014 No. 10, and provided for in the IPM Investment Declaration.
Under the Law on Pension Provision, IPMs are eligible to charge investment management fees. The maximum amount of IPM remuneration cannot exceed 7.5% of the received investment income. The actual amount of the commission is approved annually by the IPM governing body and may change no more than once a year.
During the period when pension savings are under the management of the National Bank until the contributor reaches retirement age, there is a guarantee of the safety of pension savings, taking into account the inflation rate. When transferring pension savings to IPM management, the government guarantee is replaced by the management company’s guarantee to ensure the minimum level of return on pension assets, which is calculated based on the weighted average return on pension assets transferred to IPM management operating in the market.