1) Hello! Can you explain how my pension is formed in the UAPF? Is everything that I have accumulated just will be paid to me in a lump sum?
Savings accumulated in an individual pension saving account are not paid out in a lump sum upon reaching retirement age. Pensioners receive them according to the schedule on a monthly basis, together with pension benefits from the state budget (basic and solidarity pensions). The amount of the monthly benefit from the UAPF is calculated in accordance with the Methodology stipulated by the Decree of the Government of the Republic of Kazakhstan dated October 2, 2013 No. 1042.
According to this Methodology, the calculation of the monthly pension benefit from the UAPF in the first year of retirement is as follows. The amount of savings in an individual pension saving account is multiplied by the pension savings payout rate of 6.5% and divided by 12.
For example, 9,000,000 tenge have been accumulated. 9,000,000*6.5%= 585,000 tenge. This is the annual amount of pension benefits from the UAPF. We divide it by 12 months and get: 585,000/12 months = 48,750 tenge.
In subsequent years, the size of the monthly pension benefit will increase annually by the indexation rate of pension payments - 5%.
It is possible to receive pension savings at a time only if the amount of pension savings on the date of the beneficiary's application does not exceed twelve times the minimum pension established by the law on the republican budget for the corresponding financial year (from April 01, 2022 - 576,384.00 tenge = 12 * 48,032.00).
2) Is it true that retirement savings are taxed? Why are we being forced to pay tax on my own retirement savings?
It should be noted that pension contributions when transferred to an individual pension saving account are not subject to income tax. Whereas pension benefits refer to income that is subject to individual income tax at the source of payment.
According to the Tax Code of the Republic of Kazakhstan, individual income tax is withheld at a rate of 10% of all payments generated from compulsory pension contributions (CPC), compulsory occupational pension contributions (COPC) and voluntary pension contributions (VPC).
At the same time, the Code provides for a number of adjustments, the so-called tax deductions, which are provided for when taxing pension benefits. Let us clarify that a tax deduction is an amount by which, if there are appropriate grounds, the taxable base (income on which tax is paid) is reduced.
For example, upon reaching retirement age, such a tax deduction is 14 times the monthly calculation index established by the law on the republican budget and valid on the date of accrual of income in the form of a pension benefit, for each month for which the pension benefit is paid.
For those who have reached retirement age and receive pension benefits in connection with moving to a permanent place of residence outside the Republic of Kazakhstan, the amount that goes to deductions, then the network is not taxed, is 168 times the monthly calculation index.
In addition, there are certain categories of beneficiaries to whom tax benefits are applied in the amount of 882 times the MCI per calendar year. These include, for example, veterans of military operations on the territory of other states, people with disabilities of I, II or III groups, one of the parents, guardians, trustees of a disabled child, one of the foster parents who adopted orphans and children left without parental care, foster family and others.
If the contributor decides to use pension savings for alternative purposes - to improve housing conditions or medical treatment, then he can choose the method of withholding and transferring PIT from the amounts of lump-sum pension benefits from the UAPF:
- at a time, no later than the day of the implementation of the lump-sum pension benefit;
- monthly in equal installments for no more than sixteen years according to the schedule established by the UAPF upon receipt of pension benefits.
3) Good afternoon! I am an individual entrepreneur and have a small business, please tell me how to transfer pension contributions?
Individual entrepreneurs, as well as people engaged in private practice, must be participants in the accumulative pension system and pay compulsory pension contributions in their favor and in favor of their employees in the amount of 10 percent of the income received. There is a lower and an upper bar for the size of the CPC: they must be no lower than 10 percent of the minimum wage and no higher than 10 percent of the 50-fold minimum wage established for the corresponding financial year by the law on the republican budget.
Note that the income of an individual entrepreneur determines independently. If there is no income for some period, then the entrepreneur has the right to pay compulsory pension contributions to the UAPF in his favor at the rate of 10 percent of the minimum wage established for the corresponding financial year by the law on the republican budget.
If an entrepreneur does not have an account with a second-tier bank for non-cash transfer of CPC, the contribution can be made in cash through a bank or Kazpost offices, indicating the details of the State Corporation "Government for Citizens" in payment documents. In the lists attached to payment documents, you must enter the following information about yourself, as well as (if any) employees and individuals who have entered into a civil law contract: IIN, last name, first name, patronymic (if any), date of birth, amount of contributions and period (month/months, year) for which compulsory pension contributions are paid). In addition, each month must be specified separately. This is necessary to take into account the length of participation in the accumulative pension system, which is important for calculating the basic pension from the state budget.
4) Hello! Due to temporary difficulties, my employer did not pay wages for some time. Can I make compulsory pension contributions for the previous months on my own if I am officially employed? I want to be approved for a loan
In accordance with the current pension legislation of the Republic of Kazakhstan, compulsory pension contributions are payable by contributors, by transferring the contributor's agent, that is, the employer. At the same time, only the following individuals can pay compulsory pension contributions in their favor by transferring them to the non-profit joint-stock company State Corporation “Government for Citizens” (formerly SCPBP):
- individual entrepreneurs;
- private notaries;
- private bailiffs;
- professional mediators;
- individuals receiving income under civil law contracts;
- payers of a single aggregate payment.
Thus, if you do not belong to the above category of persons, then it is not possible to independently replenish an individual pension saving account formed at the expense of the CPC.
5) I worry that after death my savings will simply “burn out”, but I would like to leave them to my only son. Tell me what happens to pension savings after death?
Articles 31, 32 and 33 of the Law On Pension Provision in the Republic of Kazakhstan (hereinafter referred to as the Law) determine that in the event of the death of a person who has pension savings in the UAPF at the expense of compulsory pension contributions and compulsory occupational pension contributions, voluntary pension contributions, his/her pension savings are inherited in the manner prescribed by the legislation of the Republic of Kazakhstan.
In addition, in accordance with the provisions of paragraph 5 of Article 50 of the Law, in the event of the death of the beneficiary, as well as a person who has pension savings and has not reached the generally established retirement age, his family or the person who performed the burial, the UAPF is to pay a lump-sum benefit for burial within the amount of 52,4 times the monthly calculation index established for the corresponding financial year by the law on the republican budget, but not more than the funds available on the individual pension saving account (IPSA).
If the balance of pension savings on the beneficiary's IPSA after the lump-sum benefit payment for burial amounts to an amount not exceeding the minimum pension established for the corresponding financial year by the law on the republican budget, this balance is paid as a payment for burial.
An up-to-date list of required documents depending on the type of pension benefit, the method of submitting them to the UAPF (in person / through postal services / a third party), requirements for their execution, as well as application forms and samples of their completion depending on the type of payment currency, samples powers of attorney, UAPF contacts are posted on the UAPF website at www.enpf.kz.