Kazakhstanis have the option to transfer their pension savings to private investment portfolio managers (IPMs) for more efficient and reliable growth of their funds. However, it is important to understand that no physical transfer of money occurs, as reported by infohub.kz.
Funds held in the Unified Accumulative Pension Fund (UAPF) are, by default, managed by the National Bank. But each contributor has the right to transfer them to private IPMs, which allows for diversification of investments to enhance reliability. These companies are professional participants in the securities market and conduct investment portfolio management activities based on a license and in the interests of their clients.
Each IPM differs in its investment strategy and portfolio structure, which affects performance indicators. Contributors can choose a risk profile that suits them. According to data from the platform invest.enpf.kz, transferred funds have a certain level of protection against losses.
When Kazakhstanis submit a request to transfer their savings to an IPM, the money remains in the UAPF and stays in the contributor's individual pension account. Only the managing entity changes – a private company instead of the National Bank. Moreover, the IPM cannot transfer these funds to anyone else. In accordance with paragraph 7 of Article 37 of the Social Code of the Republic of Kazakhstan, an IPM is not entitled to transfer pension assets under its trust management to another person.
IPMs may show varying investment returns. That is why Kazakhstanis can choose a suitable manager based on their performance, strategy, risk level, and so on. But even if investment returns are low, Kazakhstanis receive certain protection. According to the platform's data, paragraph 4 of Article 37 of the Social Code specifies compensation measures in case of losses.
For example, if the return on pension assets achieved by an IPM falls below the minimum allowable level (this minimum return is calculated according to the rules of the authorized body in agreement with the National Bank), the IPM is obliged to compensate the UAPF for the difference from its own funds. After that, the UAPF transfers the received amount to the individual pension accounts of contributors whose savings were managed by that IPM at the end of the previous year.
Even in the event of an IPM's bankruptcy, the funds entrusted to it remain protected – they will simply be returned to the trust management of the National Bank.
If Kazakhstanis are dissatisfied with an IPM's results, they can transfer their savings to another IPM – no more than once a year, or return them to the National Bank's management – no earlier than one year after the initial transfer of pension savings to the IPM's trust management. As a result, the ability to change strategy and manager remains, ensuring that pension funds are reliably invested for their preservation and growth.
In other words, IPMs cannot transfer citizens' money to anyone else or lose it. And the funds are reliably protected even against bankruptcy and excessively low returns.