Subsistence level and pension reform increases to be put into effect next year

ASTANA – Kazakh Vice Minister of Labour and Social Security Svetlana Zhakupova recently explained the upcoming changes in the country’s pension system.

Svetlana Zhakupova

Kazakh Vice Minister of Labour and Social Security Svetlana Zhakupova. Photo credit:

Solidarity pension will rise by 8 percent and basic pensions, as well as other types of benefits, by 6 percent. The increases will change the methodology of assigning basic pensions. All citizens currently receive an equal amount of basic pension payments regardless of their tenure. Starting July 1, that figure will rise as tenure increases.

Work experience will be considered both before and after Jan. 1, 1998, taking into account the list of contributions to the pension fund.

“For example, an individual is to retire next year. Work experience until Jan. 1, 1998, according to the solidarity pension system, is 20 years and for 15 years, this individual has transferred mandatory pension contributions to the accumulative pension fund without any termination. Thus, the total cumulative work experience for this person is 35 years. In accordance with the new methodology, 54 percent of the subsistence level will be assigned to people with work experience of 10 years and less. In absolute terms, this number will be 15,274 tenge (US$45.80). When work experience exceeds 10 years, there will be a 2-percent premium on each additional year. Going back to the example, an individual with a 35-year tenure will be granted pension payments equal to 100 percent of the subsistence level,” said Zhakupova.

According to data provided by the Ministry of Labour and Social Security, 2.139 million Kazakh citizens receive basic pension payments. With the new methodology, 44.1 percent of those citizens will receive twice as much as they receive today.

The policy reform will solve the issue of pensioners who have long work experience, yet receive less than average pension payment. The change will result in a significant pension raise for them and restore social justice, officials believe.

The subsistence minimum structure will also be updated starting Jan. 1 to correspond with the population’s actual consumer spending structure. To date, the figure is 24,459 tenge (US$73.40) and the upcoming structural change will increase the subsistence level by 16 percent. The reform is expected to improve the quality of life for three million citizens who receive social benefits.

Solidary pension payments are always indexed 2 percent higher than the inflation rate.

“If in past years, according to official statistics, the inflation rate was 7 percent, then we indexed pensions by 9 percent,” said Zhakupova.

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