The Parliament Passed Amendments Concerning Pension Provision

Posted: Samat Posted: 9 July 2015 12:41 Category: Hard News Views: 1833

Deputies of the Senate (upper House) of the Kazakhstan Parliament approved in two readings the Law  "Concerning Introduction of Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan On Pension Provision", Zakon.kz informs. 

The Law provides for changing the procedure for the assignment of basic pension payments depending on how long the person was a participant of the pension system. Starting from 1 July 2017 the procedure for the assignment of the basic pension will be changed.

The basic pension will be assigned only after a person has reached the retirement age and depending on the length of his/her participation in the pension system.

In the meantime, with the length of participation in the pension system of 10 years or less (or in the absence of such), the size of a basic pension will be equal to 50% of the living wage, being increased by 2% of the living wage for each full year above 10 years, but not to exceed 100% of the living wage with a 35 years’ or higher length of participation.

Also, the length of participation in the pension system will include both the years of service worked before 1 January 1998 and the period of service after that date, for which obligatory pension charges were paid.

This norm is aimed, on the one hand, at reducing the poverty of pensioners, and on the other hand, at strengthening the labor motivation and formalization of employment relations of citizens, the report explains.

In addition, due to changes in the policy for the assignment of basic pensions, the state social age benefits, which are nowadays almost equal to the size of the basic pension, are abolished.

The Law presumes that the existing accumulative pension system will be supplemented by a new notional accumulative component formed by contributions of employers at the rate of 5% of the employee's income.

"In order to increase responsibility of employers for the pension provision of citizens,  it is assumed that from 1 January 2018 a new notional accumulating component of the pension system  formed at the expense of obligatory pension charges of employers at the rate of 5% of employee income will be introduced. The additional 5% obligatory pension charges of employers (OPCE) transferred by employers will be fixed on the notional pension account of each employee opened in the UNPF",- as stated in the report of the Specialized Committee.

At the same time, pension contributions will not be the property of the citizens. The right to pension payments at the expense of OPCE (maximum size not exceeding the double living wage) will be granted to persons who have reached the retirement age (58-63/63), provided that OPCE were transferred to the notional pension account for at least 60 months, as well as disabled persons of groups I and II who were recognized as permanently disabled. The pension will be paid for a lifetime.

With effect from January 1 2016, the pension provision of all employees of the defence and law enforcement agencies will be carried out at the expense of the State Budget.

"The size of their pensions will be calculated depending on the length of service and salaries at the time of separation from the service. Since 2016, the commitments of the State Budget to pay 20% obligatory pension charges from the salaries of employees of defence and law enforcement agencies will be cancelled",- the Committee report says.

Moreover, it is assumed that 50% of obligatory pension charges transferred in their favour at the expense of the Budget before 1 January 2016, will be refunded to the Budget.

 

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