Kazakhstan to allow pension funds to invest in risky assets
Kazakhstan’s Agency for Regulation and Development of the Financial Market (ARDFM) has revised the rules governing the investment of pension assets. The amended regulations are available on the Legalacts.egov.kz portal and open for public discussion until Jan. 16.
Currently, pension savings in Kazakhstan are managed by the National Bank and five private firms: Halyk Finance, Jusan Invest, Centras Securities, Halyk Global Markets and BCC Invest.
The updated rules introduce several types of investment portfolios for pension asset managers to offer, including:
– Conservative portfolios.
– Moderate portfolios.
– Risky portfolios.
These changes expand the range of financial instruments available for pension investments. Each portfolio type will have its investment declaration developed by asset managers. However, pension savings can only be invested in risky instruments if the account holder is 13 or more years away from retirement.
The new rules also specify how much of the pension assets in each portfolio can be invested in foreign-currency-denominated financial instruments:
– Up to 30% for conservative portfolios.
– Up to 60% for moderate portfolios.
– Up to 80% for risky portfolios.
Additionally, the regulations outline procedures for private asset managers who choose to voluntarily return pension savings under their management to the National Bank. These managers must compensate for any losses if the return on pension assets falls below the established minimum threshold.
The minimum required returns for pension assets are set as follows:
– 95% of the nominal yield coefficient of the composite index for conservative portfolios.
– 90% for moderate portfolios.
– 85% for risky portfolios.
Under the current rules, the minimum return on pension assets is 70% of the weighted average nominal yield coefficient.
Since 2021, Kazakhstanis have been permitted to transfer a portion of their pension savings to private companies for trust management.
