Kazakhstan opens door for new retail investors

Clients of the United Accumulative Pension Fund (UAPF) will be able to transfer 50% of their pension savings to any investment company they want starting from July 1, 2023, according to the Ministry of Labor and Social Protection of the Population.

Even though people had the right to use their pension savings for investment purposes long before the new rule came in, they were able to use only a fraction of this money above a so-called threshold of sufficiency. For instance, as of January 1, 2023, this threshold of sufficiency was $7,300 for 20-year-old clients, $8,700 for 25-year-olds, $10,200 for 30-year-olds and $13,600 for 40-year-old people.

Now, the government is expecting that different investment strategies will facilitate the diversification of risks and allow clients to gain higher revenue. If someone wants his money to be managed by a private company, he should apply for UAPF, the Ministry of Labor said.

«This is an effective tool that is going to help people to take part in the process of managing their pension assets, to form their own pension plan and choose a better policy for investing their money,» the ministry said.

UAPF clients are able to choose a managing company for half of their savings or put it back under the public fund’s control, the agency noted.

«However, the government guarantees safety only for those funds that are kept in UAPF and are under the control of the National Bank. If a client decides to choose another managing company, this company will be one responsible for this money,» the Ministry of Labor said in a statement.

If a managing company fails to gain revenue for pension funds at least at a minimal level of yield, it should cover all financial losses at the expense of its own money. The ministry came up with this rule in order to protect regular citizens.

The UAPF which manages the pension funds has been showing higher yields than private investment companies for two years in a row. Last year, the fund reported a yield of 6.55% or $2 billion in terms of money. In the first quarter of this year, UAPF reported a 3.6-fold increase to $1 billion over the same period last year.

People can choose between five investment companies in Kazakhstan. These are First Heartland Jusan Invest, BCC Invest, Halyk Global Markets, Centras Securities and Halyk Finance. In 2022, Halyk Global Markets showed the best results in terms of yield (4.19%), Centras Securities was second (4.12%), and Jusan Invest was third (3.25%).