Retirement Guarantee Against Inflation to Be Lifted in Kazakhstan Starting 2027
Key Points
- 1. The state compensation guarantee protecting pension savings against inflation will be lifted in 2027 in Kazakhstan.
- 2. Starting in September 2026, citizens will be able to determine their own investment strategies and choose private companies.
- 3. While the state only secures the principal invested in the system, private companies will pay the yield difference with their own capital.
- 4. Economists state that the decision is risky and requires strict oversight because the majority of assets are with the National Bank.
By the Numbers
The Kazakhstan Ministry of Labor announced that the state guarantee protecting pension savings against inflation will be abolished starting from 2027. The state will continue to guarantee the principal amount that citizens and employers deposit into the pension fund; however, it will not provide additional protection against the erosion of this amount's purchasing power in the face of inflation.
The ministry justifies this decision by the fact that starting from 2026, citizens will be able to choose private companies to manage their own savings. While private management companies are obliged to cover the yield difference with their own equity, the National Bank will also be responsible for protecting assets and achieving a long-term return of 1 percent above inflation.
On the other hand, economist Ruslan Sultanov drew attention to the risks in the system, stating that 99.6 percent of the market is currently managed by the National Bank. Sultanov, stating that removing the state guarantee in the mandatory pension system exposes citizens to investment risks, emphasized that transparent rules must be established for asset management by companies.
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Frequently Asked Questions
- 1. Q: Will the state guarantee pension savings after 2027?
- A: The state will only guarantee the principal amount deposited into the pension fund through mandatory and professional contributions; it will not cover the loss of value caused by inflation.
- 2. Q: Who will prevent the loss of value of pension savings against inflation?
- A: The National Bank will try to exceed inflation; private management companies, on the other hand, will cover the difference from their own capital in case of low returns.
- 3. Q: Will citizens be able to manage their own pension money?
- A: Yes, starting from September 2026, Kazakhs will be able to choose private companies and investment strategies themselves to manage 100 percent of their savings.
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