"Topical Questions about the Unified Pension Fund"
"Minimum Adequacy Thresholds – Are Their Calculations Transparent and Can They Still Be Used?"
1. Does the age of the depositor affect the thresholds, and how is the MAT determined according to the adopted Methodology?
Minimum adequacy thresholds (MATs) depend on the age of the depositor. The older the depositor and the closer they are to retirement age, the higher the requirements for the future pension payment, so that after retirement, citizens can receive an income level close to international standards.
The classic formula for calculating the present value of future pension payments is used to determine the MAT. In other words, the new formula determines the minimum amount of savings, i.e., the MAT amount that must already be in the depositor's individual pension account (IPA) to ensure the target pension.
The use of the present value of payments formula is based on international practice for calculating the savings required for lifetime payments.
2. How has the methodology for calculating minimum sufficiency thresholds changed?
The changes to the Methodology for Calculating Minimum Sufficiency Thresholds (MST) are aimed at increasing the requirements for the minimum amount of pension savings to ensure the adequacy of future funded pensions and are designed for a higher level of pension payments.
Now, MST amounts are determined for each contributor's age using a standard present value formula based on the target indicators of future pension payments. Essentially, the new methodology answers the question: what is the minimum amount that must remain in a pension account today to ensure an adequate level of retirement income in the future?
The formula takes into account long-term demographic (national demographic tables) and financial (interest rates and indexation of payments) factors to achieve stability and predictability in the amount of future payments for citizens, as well as socioeconomic indicators such as the minimum old-age pension and the minimum wage, determined annually by the law on the republican budget.
Moreover, the calculation of the minimum sufficiency threshold no longer takes into account future pension contributions from the moment of withdrawal until reaching retirement age. This is because contributions may be incomplete or absent during certain periods due to various life situations. This approach reduces the risk that a citizen will receive a low funded pension in the future after using part of their savings.
3. Why has the Methodology for Calculating Minimum Sufficiency Thresholds changed?
Since 2021, ENPF contributors have been granted the right to withdraw part of their pension savings early before reaching retirement age for strictly defined alternative purposes, such as improving housing conditions and paying for medical treatment. State authorities developed a Methodology for Determining the Minimum Sufficiency Threshold for Pension Savings, which was then approved by the Government of the Republic of Kazakhstan.
However, frequent withdrawals of pension savings above the minimum sufficiency threshold (MST) from individual pension accounts by contributors reduce the amount of their future pension payments from the ENPF. Based on this, a decision was made to change the minimum sufficiency thresholds. This is due to the need to gradually achieve the adequacy of pension payments in accordance with the recommendations of international organizations. Therefore, the requirements for the amount of pension savings necessary to provide for a future funded pension and to increase the replacement rate of a contributor's labor income through pension payments at retirement age have been increased.
The implementation of the new model is aimed at increasing the sustainability of the pension system and ensuring an adequate level of pension provision for citizens.
4. Is it still possible to use pension savings for alternative purposes?
The ability to use a portion of pension savings for alternative purposes, as provided by law, is retained for contributors with savings above the minimum sufficiency threshold. Pensioners whose pensions amount to at least 40% of their lost income, citizens who have entered into a pension annuity agreement, and pensioners who have reached the age of retirement—that is, those categories of recipients who have already secured a certain level of pension payments—can also continue to access their savings. However, approaches to using pension savings are being refined to address the need to provide citizens with adequate and stable pension payments in the future.
5. How fair is it to calculate the minimum monthly wage based on future pensions if many citizens do not reach retirement age?
The average life expectancy of Kazakhstanis has approached 76 years (in 2025), a record high since the country's independence. Ana
