1. Does the age of the contributor affect the threshold amounts and how is MAT determined according to the adopted Methodology?

Minimum adequacy thresholds (MAT) depend on the age of the contributor. The older the contributor and the closer they are to retirement age, the higher the requirements for the future pension benefit, ensuring that after retirement, citizens can receive an income level close to international standards.

The MAT is determined using the classic formula for calculating the present value of a future pension benefit. In other words, the new formula determines the minimum amount of savings, i.e., the MAT amount that must already be in the contributor's individual pension account (IPA) to ensure the recipient receives the target pension.

The use of the present value of benefits formula is based on international practice for calculating the savings required for lifetime benefits.

2. How has the calculation methodology for Minimum Adequacy Thresholds changed?

Changes to the Minimum Adequacy Thresholds (MAT) Calculation Methodology are aimed at increasing the minimum pension savings requirements to ensure the adequacy of future funded pensions and are designed for higher pension benefit levels.

Now, MAT amounts are determined for each contributor's age using a standard present value formula based on target future pension benefits. Essentially, the new methodology answers the question: what is the minimum amount that must remain in a pension account today to ensure an adequate level of retirement income in the future?

The formula takes into account long-term demographic (national demographic tables) and financial (interest rates and indexation of payments) factors to achieve stability and predictability in future payment amounts for citizens, as well as socioeconomic indicators such as the minimum old-age pension and the minimum wage, determined annually by the law on the national budget.

Meanwhile, the MAT calculation no longer takes into account future pension contributions from the time of withdrawal until reaching retirement age. After all, contributions may be incomplete or absent during certain periods due to various life circumstances. This approach reduces the risk that a citizen will receive a low funded pension in the future after using part of their savings.

3. Why has the Methodology for Calculating Minimum Adequacy Thresholds changed?  

Since 2021, UAPF contributors have been granted the right to withdraw a portion of their pension savings early before reaching retirement age for strictly defined alternative purposes, such as improving housing conditions and paying for medical treatment. State authorities developed, and the Government of the Republic of Kazakhstan subsequently approved, a Methodology for Determining the Minimum Adequacy Threshold for Pension Savings.[1].

However, frequent withdrawals of pension savings above the minimum adequacy threshold (MAT) from individual pension savings accounts by contributors reduce the amount of their future pension benefits from the UAPF. Therefore, a decision was made to change the minimum adequacy thresholds. This is due to the need to gradually achieve the adequacy of pension payments in accordance with the recommendations of international organizations. Therefore, the requirements for the amount of pension savings necessary to provide for a future funded pension and to increase the replacement rate of a contributor's labor income through pension benefits at retirement age have been increased.

The implementation of the new model is aimed at increasing the sustainability of the pension system and ensuring an adequate level of pension provision for citizens.           

4. Is it still possible to use pension savings for alternative purposes?

The ability to use a portion of pension savings for alternative purposes, as provided by law, remains available to contributors whose savings exceed the minimum sufficiency threshold. Pensioners whose pensions constitute at least 40% of their lost income, citizens with a pension annuity agreement, and pensioners with years of service—that is, those categories of beneficiaries who have already secured a certain level of pension benefits—can also continue to access their savings.

However, approaches to using pension savings are being refined to address the need to ensure citizens have adequate and stable pension payments in the future.

5. How fair is it to calculate MAT based on future pensions if many citizens do not live to retirement age?

The average life expectancy of Kazakhstanis has approached 76 years (in 2025), a record high since the country's independence. An analysis of demographic data from 1991 to the present demonstrates changes in the nation's quality of life and health. For example, in 1991, the average life expectancy was 67.6 years (in 2001 it was 65.6, in 2011 it was 68.98, and in 2021 it was 70.23). Thus, over three and a half decades, the average life expectancy of Kazakhstani citizens has increased by more than 8 years. Increased life expectancy means that Kazakhstanis will enjoy a longer retirement period than previously. Under these circumstances, it is especially important to accumulate sufficient pension savings to maintain a familiar standard of living after retirement. Increasing the thresholds for minimum adequacy of pension savings is aimed at ensuring a more adequate level of future pension and financial stability for a person over a longer period of life after retirement.

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[1] Government Resolution "On Approval of the Rules for the Implementation of Pension Payments, Lump-sum Pension Benefit Payments for the Purpose of Improving Housing Conditions and (or) Paying for Medical Treatment, Formed from Compulsory Pension Contributions, Compulsory Occupational Pension Contributions from the Unified Accumulative Pension Fund, Their Return to the Unified Accumulative Pension Fund, Methodology for Calculating the Amount of Pension Benefits, Methodology for Determining the Replacement Ratio of the Beneficiary's Average Monthly Income with Pension Benefits, Methodology for Determining the Minimum Adequacy Threshold of Pension Savings"