2. Country Overview
The Republic of Kazakhstan is a transcontinental country in Central Asia and Eastern
Europe, the vast majority of its territory being located in Central Asia. With its territory of
2,727,300 sq km (1,053,000 sq mi) ranked as the 9th largest country in the world, it is also the
world's largest landlocked country. Kazakhstan is a member of the CIS.
Capital city – Astana; largest city – Almaty (former capital). National currency – Tenge (KZT).
3. Country Overview (continued)
Politics and Economy Population
Population: 16.8 mln. people
Age 0-15 – 10%
The Republic of Kazakhstan Structure 16-62(57) – 64%
is a unitary state with (2012) 63(58) & older – 26%
presidential regime
Working population (APFs’ members)
(Feb. 2012): 8.5 mln. People
Main industry: Oil & Gas Average monthly income (Jul. 2012):
(9th place in the world) USD 712
Retirement age:
men – 63 women – 58
GDP: Longevity (2011):
(Jan-Jun) 2012 – 105.6%
2011 – 107.5%, or $186.2 bn average – 69.01 years
2010 – 107.0%, or $148.05 bn men – 64.23 women – 73.79
2009 – 101.2%, or $115.31 bn Natural population growth rate
2008 – 103.3%, or $133.44 bn
2007 – 108.9%, or $104.85 bn
increased from 6.22% (2003)
to 13.79% (2011)
4. Pension System in Kazakhstan
1997 - reform of the pension system in Kazakhstan and establishment of the first “State
Accumulative Pension Fund” (Gosudarstvenny Nakopitelny Pensionny Fond) which then
became the APF “GNPF”, JSC
New pension system is based on the three pillars:
PAYG pillar, the former Soviet Union heritage based upon the “solidarity of generations” where the
pillar
State budget is a source of pension distributions by means of taxes and other budgetary receipts.
Pension distributions amount depends on the employment duration. Currently, this pillar covers
those who had been employed for at least six months prior to January 1, 1998.
Compulsory defined contributions accumulative pension plan (99.81% of all accumulated
pension assets as of 1 Sept 2012). Pension contributions fixed at 10% of the gross monthly
income are paid by all employed citizens of Kazakhstan and foreign stateless individuals who
established permanent residence in Kazakhstan, to their individual accounts in one of the APFs
selected in contributors’ discretion. Contributors have the right to transfer their savings from one
APF to another twice a year, but all savings of each member must be kept in one APF at a time.
Voluntary accumulative pension plan embracing voluntary and voluntary-occupational pension
contributions. This pillar is less developed.
5. Pension System in Kazakhstan (continued)
Currently there are 11 Accumulative Pension Funds (APF) operating
in Kazakhstan. The APFs in Kazakhstan are licensed to act also as
Accumulation of
the Asset Management Companies (AMC). They manage pension
Pension Assets &
assets of their members (contributors), and also have their own
Asset Management
assets and capital that are accounted for separately (Chilean
Chilean
model).
model
Pension assets are accumulated and accounted for based on the
Unit-Linked Plan Unit-Linked Plan i.e. the cash value of pension contributions
Unit- Plan,
varies according to the current net asset value of the underlying
investment assets. It allows protection and flexibility in investment.
The APFs have three income sources
sources:
Income Structure 1. Monthly commission fee on accumulated pension assets
(≤0.05%, GNPF’s current fee is 0.0375%)
2. Monthly commission fee on investments return (≤15%, GNPF’s
current fee is 12%)
3. Return from investments of own assets
7. GNPF Shareholder
The National Bank of the
Republic of Kazakhstan
100%
100%
GNPF is the only APF with direct GRK
participation through the National Bank’s share
NBRK intends to privatize GNPF and, therefore, is looking for a
strategic investor that will acquire the control stock and help to
further improve the Fund’s already strong position by:
improving the Fund’s corporate governance;
refining the existing risk management system;
bringing in know-how in investing pension assets; and
providing access to international capital markets
14. Regulation
The APFs’ activity is licensed and regulated by the Committee
of the National Bank of the Republic of Kazakhstan for
Control and Supervision of the Financial Markets and
Firms
There are three main prudential regulations established and controlled by the
Committee:
K1 - minimum capital requirement
K2 - annual average weighted investment return
benchmark for the last 60 months
Limits on pension assets investments
15. Foreign Investor: Legal Issues
Per the Law of the Republic of Kazakhstan On the
Pension Provisions in the Republic of Kazakhstan (The
Law), Article 36:
A non-resident investor shall:
non- shall
be a legal entity
have a minimum rating as set below:
Rating and
Moody's Dominion Japan Credit
Standard and Investment Capital
Investors Fitch Bond Rating Rating Agency
Poors Information Intelligence
Service Service (DBRS) (JCR)
(R&І)
ВВ- Ва3 ВВ- BBL BB- BB- BB-
Legal entity registered in an off-shore zone* or the one having affiliates registered in off-
shore zones shall not act as a shareholder of any pension fund in Kazakhstan
*All restricted off-shore zones are listed in the Appendix A
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