Pension assets to be fully consolidated in the Q1 2014: Central Bank Governor

All the pension assets will be united into the state-run single pension fund before April 2014, the country’s Central Bank Governor Kairat Kelimbetov said in the Majilis (lower chamber) November 13. “Transfer of pension assets from privately-held pension funds to the single pension fund will be complete in the Q1 2014”, Mr. Kelimbetov said. According to him, the process is divided into two stages, with all the individuals’ accounts and investment portfolios being transferred to the single fund at the first stage and the records being transferred at the second stage. “Once the assets are transferred in the Q1 2014, the Single Fund will start consolidated management of all the pension assets (…) as of October 1, 2013, pension savings made up 3.6 trillion tenge, that is 11% of the country’s GDP”, the Central Bank Governor said. Kazakhstan’s President Nursultan Nazarbayev instructed the Government late January to merge all the pension funds into a single government-owned entity. The Single Pension Fund was launched in August 2013. As of December 1, 2012 there were 11 pension funds operating in Kazakhstan, with combined savings standing at around $21 billion. Before the decision on merging all the country’s private pension funds, PM Serik Akhmetov said that “the current service fee rates applied by the country’s pension funds have been reducing the people’s pension savings by 26%”. “According to experts, within the average saving period, the applicable service fee rates have been slashing people’s savings by about 26%. It is an excessively high rate. Given all that, the decision to launch a single pension fund [to replace all the pension funds operating in Kazakhstan] was very reasonable on the part of the Government”, the PM said May 5. “This scheme of managing has brought about a number of problems … It’s obvious that private pension funds have failed to cover all working people with saving plans”, the PM admitted at that time. According to him, only 5.6 million out of 8.4 million working people were covered with saving plans, with only 4 million people making pension deductions on a regular basis, which was less than half of working population.