28 August, 2018

Legislative changes raised basic pensions of over 1.8 million people since early July — Ministry of Labor

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At the press conference in the press center of the Government, Minister of Labor and Social Protection of the Population Madina Abylkassymova told about the first results of the implementation of the Bill on Social Security.

In July, the bill "On Amendments and Additions to Some Legislative Acts of the Republic of Kazakhstan on Social Security Issues" was adopted. One of its rules was changing the conditions for pension contributions by those who work under civil-law contracts.

"This bill allowed from July 1, 2018, to raise basic pensions for more than 1.8 million people, our pensioners. Increased amounts of basic pensions were introduced, depending on the length of participation," Abylkassymova noted. 

The second main objective of the bill is the introduction of a benefit for persons who care for children with disabilities of the first group since childhood. 

"These were two big initiatives of our Head of State, which we implemented July 1. This allowed to increase the average size of pensions and to support the categories of citizens in need who are in a difficult life situation," the minister stressed. 

Also Abylkassymova commented on the novel on civil-law contracts, the so-called standard labor contracts. 

"Previously, this rule sounded that they have the right to make pension contributions. In fact, we see that the labor market is developing towards more self-employment or freelancing. This is happening all over the world, and Kazakhstan is no exception," Abylkassymova said. 

According to her, today there are new flexible forms of employment. If earlier the emphasis was mainly on wage earners, now the Labor Code mainly regulates relations arising through labor contracts.

"At the same time, we understand that the labor market is developing: it is remote work from home, part-time work, part-time work. A civil law agreement is a flexible form of employment that allows a person to carry out activities in convenient formats. According to the Committee on Statistics, about 126,000 people now work under such contracts in large and small enterprises," Abylkassymova said, responding to questions from media representatives. 

It should be noted that to date, the participants of the employment contract did not make pension contributions. As the market grows, the number of people employed under the contract grows. In this regard, it was decided to move to a funded pension system. It is not voluntary but mandatory. This means that all hired workers, individual entrepreneurs necessarily make deductions — 10% of their income. These are individual savings to ensure a decent old age. 

"The solidarity pension system will decrease: in 2048, we expect that it will be completely curtailed. There will be two levels of pensions: basic - the state guaranteed pension to all citizens, it will replace the solidarity," the minister added. 

The size of the basic pension was increased. According to Abylkassymova, registration and record-keeping are compulsory. This is due to the fact that the basic pension is tied to the length of service. In cases where there are no formalized employment contracts (this often applies to freelancers), there is a problem with calculating the size of the basic pension. So, with an experience of 33 years and above, it will be one size of the subsistence minimum (it will be constantly indexed at the inflation level). The second component is a funded pension, so it is extremely important to have your own retirement savings.

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