20% of the Single Pension Fund’s assets to be invested abroad

Kazakhstan plans to invest 20% of the Single Pension Fund abroad within the following 3-5 years, KazTAG reports, citing the country’s Central Bank Governor Gregory Marchenko as saying. “Within the following 3-5 years, the share of foreign securities in the Single Pension Fund’s portfolio should be brought up to 20%. Now it stands at 10%. (…) The pension assets will not be invested into private equity and hedge funds”, he said. The Single Pension Fund was created by the governmental decree of July 31, 2013. Mr. Marchenko briefed late July that “the process of forming the Single Pension Fund is not complete”. It is being created on the basis of the state-run pension fund [the rest of the country’s pension funds to be merged are privately-owned]. Kazakhstan’s Government will be the founder and the sole shareholder of the Single Pension Fund. The assets will be managed by the National Bank (Central Bank of Kazakhstan) as the Bank already has a vast experience of managing the National Oil Fund’s money”. “I am not sure the pension reform is complete before the end of the year (…) We need to make sure everything is done prudently, rather than to set a tough deadline. The pension assets mean 8.5 million depositors with a total of $23 billion worth savings”, Mr. Marchenko is quoted by KazTAG as saying this time. 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 10 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.