Kazakhstan has made notable progress in the latest Global Pension Report by international insurance group Allianz, moving up eight places to 26th out of 71 countries. This improvement places Kazakhstan ahead of countries such as China, Turkey, Singapore, Spain, and Indonesia. Analysts at Ranking.kz attribute this rise to improvements in several areas of Kazakhstan’s pension system, which is the only one from Central Asia and among the Eurasian Economic Union (EAEU) countries included in the Allianz ranking.
The Allianz Pension Index (API), which forms the basis of the ranking, evaluates pension systems through 40 indicators grouped into three categories: sustainability, adequacy, and integrity. These indicators consider factors like demographic changes, public debt, living standards, and the financial health of pension institutions. Scores range from 1, representing the best performance, to 7, the worst. Kazakhstan earned an overall score of 3.5, better than the global average of 3.7. The country performed especially well in sustainability, with a score of 3.6, and in the adequacy of payments, scoring 3.2, reflecting a pension system that is both resilient and fair in its distribution.
In comparison, the highest-ranking countries include Denmark, which scored 2.3, followed by the Netherlands and Sweden with 2.6 each, and Japan at 2.7. Other top performers are New Zealand, Israel, Australia, the United Kingdom, Norway, and the United States. At the lower end of the scale were Laos, Malaysia, and Sri Lanka, each with scores above 4.6.
Kazakhstan’s pension system has evolved significantly since the Soviet era. In 1998, the country moved from a pay-as-you-go model to a multi-tiered pension system. The current model combines distributive and accumulative components, with pensions funded from three main sources. The first is the state budget, which finances solidarity and basic pensions. The second involves mandatory savings through the Unified Accumulative Pension Fund (UAPF), where employees contribute 10% of their salary, and employers contribute 5% for hazardous jobs. The third source is voluntary contributions made by individuals or employers. Starting January 1, 2024, Kazakhstan introduced a new tier of mandatory employer pension contributions. These contributions will gradually increase to 5% of wages by 2028 and apply to citizens born in 1975 or later.
Globally, pension systems are shifting towards accumulation-based models. In 2000, more than 65% of pension payouts were distributed through pay-as-you-go systems, but by 2024, this share is expected to drop below 50%. Kazakhstan was the first country among the Commonwealth of Independent States (CIS) to adopt an accumulative pension system and is now viewed as a regional leader in pension reform.
Experts from Allianz emphasize the growing need for such systems due to demographic changes worldwide. The United Nations projects that by 2050, the number of people aged 65 and older will nearly double from 857 million to 1.58 billion. The ratio of pensioners to working-age people is expected to rise from 16 to 26 for every 100 workers. To ensure pension systems remain sustainable over the long term, experts advocate a balanced approach that mixes state-funded pensions with private accumulative elements. Currently, about 2.5 million people in Kazakhstan receive pensions.
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