Pensions to be raised by 9% starting from January 1, 2013

Starting from January 1, 2013 retirement allowances in Kazakhstan will be raised by 9%, according to the country’s Prime Minister’s website. Respective amendments are to be submitted to the Government for consideration shortly. The minimum retirement allowance will grow from the current $116 to $127, with the average retirement allowance standing at $281. According to the website, the number of retirement allowance recipients at the moment stands at 1 770 000 people. January 1, 2012 all the retirement allowances increased by 9%. As of December 1, 2012 the average retirement allowance stands at $257. There are 11 pension accumulation funds operating in Kazakhstan, with 10% of monthly salaries being transferred to a fund [chosen by each employee at his/her own discretion] on a mandatory basis. The number of individual accumulation accounts makes up 8.4 million. As of November 1, 2012 the overall pension accumulations totaled $20.5 million. Back in September 2012 President had tasked Mr. Marchenko, National Bank Governor, and the National Bank with working out suggestions on how to reform the country’s pension system. “If the retirement age isn’t raised [from the current 58 for women and 63 for men], the country’s pension system will go bankrupt. It’s just a matter of time; and of course the timing depends on the volume of oil revenues”, Mr. Marchenko said at a press-conference October 10. Earlier Tengrinews.kz reported that Mr. Marchenko doesn’t support the World Bank’s suggestion on launching a single pension fund. “We [the Central Bank] turn down the suggestion with indignation. It is wrong to invest the accumulated pension assets abroad”, he believes. According to the Central Bank Governor, the major reason why such suggestions have been surfacing is that the pension savings figure currently stands at $18 billion, and “it is a lucrative lump of interest to many, and many entities would want to decide on investing the funds”. Mr. Marchenko emphasized that Kazakhstan needs to think of public private partnerships to launch investment projects inside the country. He believes about $6 billion of pension assets could be invested into domestic projects involving dependable borrowers.