In 2014, the estimated cost of buying the minimum annuity for women who are 50 years old will be 7.3 million tenge for men who are 55 years old – 5.2 million tenge. This was reported to Kapital.kz business portal by the press service of the State annuity company (SAC). 

Under the current pension legislation, pension payments from life insurance companies cannot be lower than minimum pension. Therefore, when calculating the price of annuity, the underlying reason for insurers is the minimum pension (in 2014 – 20 thousand 782 tenge). The increase in the level of pension annuities is connected not only with an increase in the minimum pension, but also with the mandatory indexation of pension annuities in the amount of 5%, which was introduced in 2013, Yevgeniy Pan, the chairman of the SAC said.

“The advantage of mandatory indexation of pension annuities is extra protection against depreciation of pension savings, the inevitable consequence is increase in the minimum price for an annuity “, Yevgeniy Pan, the chairman of the SAC said.

As previously reported, in June 2013, the sale of retirement annuities was suspended. Signing new contracts will be started by annuity insurers not earlier than the end date of the last transfer of pension savings in the Uniform PF (UPF). According to the schedule approved by the National Bank, transfer of savings will end on 26 June 2014.

Citizens receive a pension from three sources: the basic state pension, pension from the solidarity system, pension from savings system, and there is an additional source – a pension from a life insurance company. In 2013, the cost to purchase a minimum annuity for men who are 55 years old was 2.7 million tenge, for women who are 50 years old was 3.3 million tenge.

“However, if a citizen acquires retirement annuity at a later age, its price will be lower. This is due to the so-called annuity factor, which is taken into account in calculating the duration of human life,” Yevgeniy Pan said.

A specific nature of receiving a pension from the insurer is that in the adequacy of pension savings it can be received by women who are 50 years old, men who are 55 years old. At the same time, the annuity holder continues to work and allocate savings to the pension fund.

According to Kazakhstan legislation, citizens have the right to combine mandatory savings accounts and voluntary savings accounts, if they prefer to pay extra out of pocket to buy a retirement annuity.

Source: Kapital.kz Business Portal