State-run Single Pension Fund to deposit money with Kazakhstan-based banks13 may 2014, 14:36
One of the ways to invest the savings kept in the State-run Single Pension Fund will be depositing some part with Kazakhstan-based banks, with banks having to compete for the right to accommodate the money, Newskaz.ru reports, citing Kairat Kelimbetov, the country’s Central Bank Governor.
“Banks will be eligible to accommodate the money as deposits if they meet certain criteria, with one of the criteria being attractive interest rates. The rules of the game are still being defined”, he told a briefing in Astana today.
Central Bank Governor added that the new concept of investing also envisages purchase of public securities and investment into foreign financial tools.
“We believe we will be able to raise the earning power of people’s pension savings”, he said.
“I commission the National Bank and the Government to work out a strategy to invest the assets of the Pension Fund, including depositing the money with Kazakhstan-based banks for a long term”, President Nazarbayev said when speaking at the sitting of the Foreign Investors' Council (FIC) in April.
He instructed the Government late January 2013 to merge all the pension funds into a single government-owned entity. The Single Pension Fund was launched in August 2013. The merger was complete late March 2014.
As of December 1, 2012 there were 11 pension funds operating in Kazakhstan, with combined savings standing at around $21 billion.
As of the end of March 2014, there were altogether 9.7 million accounts, with the overall savings amount standing at $21.3 billion. Kazakhstan’s Central Bank manages the assets.
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, 2013.
“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.