Yelena Bakhmutova, chair of the board of the Association of Financiers of Kazakhstan, has explained why Kazakhstani citizens' pension savings should not be transferred to banks: credit institutions have too short an investment horizon, which means these funds cannot be managed effectively. At the same time, the savings could be used to finance major infrastructure projects, the website infohub.kz reports.
In the podcast "Dialogues on the Pension System" by the Unified Accumulative Pension Fund (UAPF), Bakhmutova, who heads the Association of Financiers of Kazakhstan (AFK), addressed the issue of trust in the pension system. According to her, many people write in the comments that it would be better to place their pension savings in bank deposits, where they could earn a higher return. In theory this is possible, she said, but banks guarantee deposits only up to 20 million tenge.
"Even if it is a term deposit, what is being offered now — it can be for up to three years. So, can you imagine the investment horizon? It is very short. And now let's look at it from our perspective as citizens. This is a huge investment potential — over 28 trillion tenge (note — the volume of savings in the UAPF). It is comparable to the entire volume of deposits held by individuals. This is a huge potential that can be invested. Invested, among other things, through the state, government securities or debt instruments. In this way we can improve our infrastructure, well, essentially develop our economy and raise the well-being of the entire population," Bakhmutova noted.
At the same time, according to the head of the AFK, deposits have a short term, and through them only short-term loans can be financed. If pension savings were shifted into certain short-term securities, the competitive advantage that has been built up in Kazakhstan over 30 years would be lost. At the same time, ordinary Kazakhstani citizens — UAPF contributors — are not obliged to think about this, she said, but mechanisms are needed to ensure pension savings generate good returns.
"Therefore, we now need to propose mechanisms that would make it possible to harness the potential that has already been created over 30 years, but in such a way that people trust that investments in such large projects, including infrastructure projects, bring benefits not only to the entire population but also to them as individuals," the head of the AFK noted.
Yelena Bakhmutova also noted that the National Bank plans to gradually reduce its presence in the capital market and over time transfer the functions of managing pension assets to the Unified Accumulative Pension Fund (UAPF).