Pension system in Kazakhstan: problems and prospective. Issues of Implementation of the Notional Defined Contribution component into the Pension System of Kazakhstan

Abstract

The research work describes the current pension system of Kazakhstan, its main issues, performance, adequacy, and working environment. The main milestones of developing the pensions system are shown. The advantage and drawbacks of two type pension systems, such as Pay-as-you-go and cumulative components are analyzed and the current performance of the Unified accumulative pension fund is investigated. The main worldwide coefficients such as pension coverage, investment income of pension fund, government expenses amount, replacement ratio as well as a demographic tendency, and general economic development were analyzed, discussed, and summarized. The analysis of Kazakhstan’s pension system allowed to reveal their problems. The result of such analysis transferred into the next step of evolution of the pension system, which already considered by our government – the introduction of the notional defined component into the pension system of Kazakhstan. Generally, it is a relatively recent form of development of the pension system. For the introduction this system the world's best practice on the example of Sweden was reviewed and compared with Kazakhstan's capabilities. Considering that each country in the world has its features of development in an economic and political context, our government should consider at least the following issues of implementation of the notional defined component into the pension system of Kazakhstan: nature of our economy, human welfare, level of social responsibility, and other main factors. The prospective development of the pension system is analyzed and recommendations for further development are designed.