The share of investment income in pension accumulations is constantly growing every year. In general, the net investment income provided by the National Bank since the merger of all pension assets into the UAPF amounted to 6.2 trillion tenge.

From January 1 to May 1, 2022, net investment income amounted to about 128.7 billion tenge.

Since the beginning of the year, due to the backdrop of a worsening geopolitical situation, financial volatility has increased among global financial and commodity markets, which has affected both the growth of inflation and the profitability of pension assets.

The profitability of pension assets changes as a result of market and currency revaluation of financial instruments, which since the beginning of the year has been both positive and negative in different periods.

Pension accumulations are invested in financial instruments in different currencies. About 2/3 of investments are placed in tenge and about 1/3 - in foreign currency, most of foreign currency investments - in US dollars. Accordingly, the exchange rate of the US dollar affects investment income as  part of pension assets: if the national currency strengthens, investment income may decrease, and if the dollar exchange rate rises, it can grow. In general, it is worth emphasizing that since 2014 the foreign exchange share of pension assets has increased from 17% to 32%.

From January to early March 2022, the tenge currency depreciated against the US dollar from 431 tenge to 495 tenge and to 512 tenge. Thus, there was a positive currency revaluation of pension assets on a weekly basis. Contributors have seen significant positive investment returns on their individual pension accounts. Then the national currency began to strengthen, the exchange rate for the US dollar started to decline. As of May 1, it was 448.49 tenge per 1 dollar. Since the revaluation of pension assets is carried out on a weekly basis and on the last day of the month, contributors see changes in their statements.

As a result, negative events in the financial markets along with currency revaluation of assets affected the investment return, which for the last 12 calendar months amounted to 8.00%.

It is worth emphasizing that pension accumulations are long-term investments and it is advisable to analyze the amount of investment income for a period of at least 1 (one) year. Short-term data (weekly, monthly, etc.) are not indicative, because of constant changes in market conditions.

For example, the amount of net investment income for the past 2021, distributed to the pension accounts beneficiaries, amounted to about 1.4 trillion tenge, which exceeded the amount of contributions received during the year (1.3 trillion tenge). The yield on the UAPF’s pension assets in 2021 managed by the National Bank of Kazakhstan since the beginning of the year amounted to 11.13%, with inflation of 8.4%.

It should be noted that the average annual yield of pension assets for five years is 9.5% with inflation of 6.7%, for three years - 9.5% with inflation of 7.1%.

The investment return from the day of the foundation of pension system (1998) as of May 1, 2022, on an accrual basis, amounted to 688.00%, with inflation for the entire period of 593.98%. Thus, the real (i.e., exceeding inflation) return on pension assets for the period from the start of the accumulated pension system as of May 1, 2022 amounted to 94.02%.

The entire system of investment management and accounting for pension assets is transparent: each contributor has the opportunity to see his investment income in his personal account on the enpf.kz website or in a mobile application.

Information on the investment management of the UAPF’s pension assets and on financial instruments in which UAPF pension assets are placed is published on the UAPF official website (www.enpf.kz) in the “Indicators/Investment Activity” section.

The UAPF was established on August 22, 2013 on the basis of GNPF APF JSC. The UAPF founder and shareholder is the Government of the Republic of Kazakhstan represented by the State Institution “Committee of State Property and Privatization” of the Ministry of Finance of the Republic of Kazakhstan. UAPF pension assets are managed by the National Bank of the Republic of Kazakhstan. From January 1, 2016, the functions for developing proposals to improve the management of pension assets were transferred to the National Fund Management Council. In accordance with the pension legislation, the UAPF attracts compulsory pension contributions, compulsory occupational pension contributions, voluntary pension contributions, pension benefits, individual accounting of pension accumulations and benefits, provides the contributor (beneficiary) with information on the status of his pension accumulations (for more information visit www.enpf.kz)