Reformation of the Kazakhstan pension system has caused hectic discussions in the society. But despite extensive discussions, the key provisions of the pension legislation still raise questions. In an interview with our correspondent, the Deputy Chairman of the Board of Samruk-Kazyna National Welfare Fund JSC Elena Bakhmutova expressed the view about certain aspects of the modernization of the pension system in Kazakhstan.
– Elena Leonidovna, Kazakhstan’s pension system used to be considered as one of the most progressive and not once was marked by international experts. In the meantime, since 1998, when our country began transition to the accumulation system, many things have changed. Do you think the need for modernization is ripe?
– The transition from joint to the accumulation pension system was quite a revolutionary transformation 15 years ago. The expediency of placing the primary responsibility for the care of pension income on employees is generally not disputed by critics of the accumulation system because it fits in the basic principles of market economy. However, the amount of responsibility transferred from the state and employers on the shoulders of employees needs a reasonable adjustment. Formation of a three-tier system of pension provisioning of citizens was laid in the foundation of the concept of the pension reform as early as 15 years ago . At present the three-tier system, ie a system of shared responsibility for pension provisioning of citizens between the state, the employer and the employee himself, is in the process of adapting to the current market conditions.
In this context it is particularly important to secure the elements of employers’ responsibility for the formation of pension income, in particular it is essential for workers engaged in jobs with hazardous conditions.
We have to admit that voluntary professional scheme of pension provisioning for persons employed in industries with hazardous working conditions, up to now has not been properly developed. It was intended to ensure an increase in pension savings at the expense of voluntary pension contributions by employers and allow employees to retire early, at the age of 53-55 years. However, in practice, members of the system are about 4 thousand people, and their savings barely exceed KZT 100 million.
With the reformation of the pension system the transition to mandatory occupational pension contributions will be performed. This means that workers employed in jobs with hazardous conditions will receive pension contributions to their individual pension accounts, where 10% are mandatory pension contributions from the employee’s income and 5% of revenue from the mandatory professional contributions of the employer. Subject to continuous participation in the pension savings during 30 years, the employee will be able to save enough money for an early retirement.
– What effect will the transition to mandatory occupational pension contributions have on employers?
– Under current legislation, employers carrying out voluntary professional pension contributions have tax preferences. We already know that these standards will be maintained and the amount of contributions to occupational pension schemes will be taken into account when making deductions for tax purposes. Accordingly, the introduction of mandatory occupational pension contributions should not result in increasing the burden on the employer.
– One of the key directions of the pension reform was the creation of the Uniform accumulating pension fund. Much has been said about the benefits of UAPF, but its investment strategy remains unclear. Will the successor of private pension funds be able to solve the painful problem of ensuring the return on investment?
– The issue of return is inseparable from the level of risk. The higher yield of the instrument – the higher is the risk and vice versa. As regards the investment of pension assets, preference is tradionally given to instruments with a moderate level of risk.
According to the new law, to improve the efficiency of UAPF investment strategy, the Council of Pension Asset Management under the President of the Republic of Kazakhstan will be created. Based on the recommendations of the Council composed of representatives of the state, financial market, as well as independent experts, investment policy will be formed and the parameters for investing pension assets to different classes of financial instruments will be set.
– As far as is known, Samruk-Kazyna JSC planned to acquire shares of three accumulation pension funds on behalf of the Government of the Republic of Kazakhstan which transaction has not yet taken place. Isn’t it a barrier for the transfer of assets of these pension funds to UAPF?
– No, the issue of sale and purchase of NPF shares does not affect the possibility to transfer pension assets of these funds to UAPF. The process of transferring pension savings will be carried out according to the schedule set by the National Bank of Kazakhstan.
– Various aspects of the pension reform caused rather heated public discussions, sometimes diametrically opposite opinions were expressed, but there is still a feeling of low people’s awareness about the planned innovations. Does it not create a ground for social unrest?
– I think it’s a question of proper organization of explanatory work. Samruk-Kazyna being the large employer in the country is conducting explanatory work within the Fund’s group in respect of main directions of the pension system development in Kazakhstan, regulation of social and labor relations, based on the principles of social partnership, and we believe this work is quite effective.
To keep employees of Samruk Kazyna group informed, such resources are involved as corporate sites and publications, holding targeted staff meetings including those with the participation of representatives of government agencies, akimats (local government offices), trade unions. Thus, a meeting of “Expert” Discussion Club of Samruk- Kazyna JSC on the topic “Modernisation of the pension system of the Republic of Kazakhstan” was held in April of this year, which was attended by representatives of government agencies, deputies of the Parliament of the Republic of Kazakhstan, representatives of public organizations, trade unions and the media.
– Over the last year, a number of social innovations were initiated in the Republic at the legislative level. Were these changes reflected in the social policy of the Fund?
– Yes, of course. Social responsibility is one of the key indicators of Samruk -Kazyna JSC activity. Thus, due to changes in the legislation of Kazakhstan regarding payment of maternity leave, in April 2013 the Fund amended the policy of providing social support to companies’ employees. In accordance with the Labour Code of the Republic of Kazakhstan, companies were recommended to pay for maternity leave, leave to employees who adopted a newborn baby, while maintaining the average wage, excluding state social benefits. In order to ensure targeted social support of women working in the Fund’s group of companies, additional measures will be developed.
– Samruk-Kazyna JSC many times informed the public about the ongoing monitoring of social attitude among the companies’ employees. How often are such studies conducted?
– Monitoring of the social mood among employees is conducted in Samruk-Kazyna group on an ongoing basis. This work is entrusted to a specially created “Center for Social Partnership” Corporate Foundation. To build a new model of social-labor relations with effective mechanisms for prevention and resolution of labor disputes, the Fund implements practices for determining the so-called “social stability rating” for each company. Studies are planned to be conducted on an annual basis.
In addition, polls are conducted to monitor workers’ reaction to changes in the legislation of the Republic of Kazakhstan. So, in April of this year, a study was conducted on the issue of raising the retirement age for women to diagnose sentiment in the companies of the fund’s group.
– What other mechanisms are used by the Fund to improve social partnership?
– At present, the CSP has a Corporate Center for Mediation and negotiation process, which on systematic basis is preparing professional mediators and negotiators from the staff of subsidiaries and dependent companies of the Fund. Over 400 mediators and negotiators were trained in the Fund Group who are currently widely implement and apply the mediation tools among employees in the subsidiaries of the Fund.
Also, the Council of Trade Unions of the Fund is working on a regular basis, whose main tasks are to coordinate the implementation of collective agreements and ensuring coordinated positions of the social partners in key areas of labor and social policy for the fund group.
Interviewed by Sergey VOLKOV
Source: Kazpravda.kz
