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Pension system of Kazakhstan to be transferred to three sources of financing

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Pension system modernization aims to create a multi-level system. At the same time it must be diversified in sources. This was reported at the Government meeting by the Minister of Labor and Social Protection of Population Tamara Duissenova.

The Minister recalled that since 1998 the State pays a solitary pension, since 2005 � basic. Since 1998 all employed citizens transfer 10% of their wages to the accumulated pension fund. This will all remain unchanged. New � going forward the employer will be included in the pension system. He will contribute 5% of the employee’s wage.

Transfer to a new system with three sources of financing is planned to be implemented in 2020. World practices show that a multi-level pension system is more stable and allows receiving adequate amounts of pensions.

In addition, T. Duissenova reminded that in the upcoming years it is planned to further raise pensions being paid from the State budget. Since July 1, 2017, both solidary and basic pensions will be increased 20% compared to 2016. Since January 1, 2018, basic pensions, disability benefits, loss of bread-winner benefits will increase 16%. Since July 1, 2018, changes will be made to the methodology of appointing basic pensions: now basic pension will be assigned based on the length of participation of a citizen in the pension system. This will affect more than 3 million people.

This provides for additional expenses from the State budget. Around 300 billion tenge is already set aside in the budget. We expect that from July 1, 2018, the average amount of pensions will increase 45% compared to 2016, � the Minister commented.

The ideology of targeted social assistance will be completely changed: targeting will strengthen, TSA will be paid instead of three benefits, the amount of which is much more, and the poverty line will be increased from 40% to 50% of the subsistence level. This measure will also allow increasing the amount of TSA. Last year around 7 thousand families participated in this program and 90% of 8 thousand able-bodied members of these families found employment.

Changes to the system of special social services began in 2009. Today it is possible to say that the market of special social services is completely demonopolized.

If before the services were provided only by state boarding schools, today more than 100 NGO’s provide special social services to 6000 citizens. If we did not demonopolize the market, we would have to build 60 boarding schools, isolating these people from their families, � T. Duissenova explained.

In conclusion, the Minister noted that within the plans of the Ministry is the construction of small-size houses. There is positive experience � the Balapan program. Low capacity houses may be constructed within the framework of PPP’s. Further it is planned to expand boarding schools, which currently house from 100 to 600 people. The main goal of all these changes is the provision of social services where a person lives.

Source: Government of the Republic of Kazakhstan

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Pension system of Kazakhstan to be transferred to three sources of financing

Closed

Pension system modernization aims to create a multi-level system. At the same time it must be diversified in sources. This was reported at the Government meeting by the Minister of Labor and Social Protection of Population Tamara Duissenova.

The Minister recalled that since 1998 the State pays a solitary pension, since 2005 � basic. Since 1998 all employed citizens transfer 10% of their wages to the accumulated pension fund. This will all remain unchanged. New � going forward the employer will be included in the pension system. He will contribute 5% of the employee’s wage.

Transfer to a new system with three sources of financing is planned to be implemented in 2020. World practices show that a multi-level pension system is more stable and allows receiving adequate amounts of pensions.

In addition, T. Duissenova reminded that in the upcoming years it is planned to further raise pensions being paid from the State budget. Since July 1, 2017, both solidary and basic pensions will be increased 20% compared to 2016. Since January 1, 2018, basic pensions, disability benefits, loss of bread-winner benefits will increase 16%. Since July 1, 2018, changes will be made to the methodology of appointing basic pensions: now basic pension will be assigned based on the length of participation of a citizen in the pension system. This will affect more than 3 million people.

This provides for additional expenses from the State budget. Around 300 billion tenge is already set aside in the budget. We expect that from July 1, 2018, the average amount of pensions will increase 45% compared to 2016, � the Minister commented.

The ideology of targeted social assistance will be completely changed: targeting will strengthen, TSA will be paid instead of three benefits, the amount of which is much more, and the poverty line will be increased from 40% to 50% of the subsistence level. This measure will also allow increasing the amount of TSA. Last year around 7 thousand families participated in this program and 90% of 8 thousand able-bodied members of these families found employment.

Changes to the system of special social services began in 2009. Today it is possible to say that the market of special social services is completely demonopolized.

If before the services were provided only by state boarding schools, today more than 100 NGO’s provide special social services to 6000 citizens. If we did not demonopolize the market, we would have to build 60 boarding schools, isolating these people from their families, � T. Duissenova explained.

In conclusion, the Minister noted that within the plans of the Ministry is the construction of small-size houses. There is positive experience � the Balapan program. Low capacity houses may be constructed within the framework of PPP’s. Further it is planned to expand boarding schools, which currently house from 100 to 600 people. The main goal of all these changes is the provision of social services where a person lives.

Source: Government of the Republic of Kazakhstan

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