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Kazakhstan’s National Bank plans to entrust some pension assets to private managers while retaining responsibility for managing the funds and overseeing their safekeeping. Savers will also retain the right to choose a manager themselves (inbusiness.kz). The details of the new mechanism and its launch date have yet to be decided. Transfers can begin once the rules and infrastructure are in place.
Who will manage the pension funds
Under the new model, the National Bank will appoint licensed Kazakhstani companies to manage specific parts of the pension portfolio. This is known as a mandate-based approach: each manager is assigned a particular investment remit and must follow established requirements.
The National Bank will continue to invest the bulk of pension assets itself. Private companies will operate under its supervision. In its response, the bank put it this way: “Engaging IPMs to manage individual investment mandates does not mean that the National Bank is relinquishing control over pension assets.”
IPMs are investment portfolio managers.
Will savers still be able to choose their own manager
Yes. According to Nurzhan Tursunkhanov, deputy chair of the Agency for Regulation and Development of the Financial Market, savers will retain that choice. Transfers initiated by the National Bank will provide an additional way to involve private companies in managing pension funds.
The National Bank currently manages most savers’ pension funds. Tursunkhanov says the initiative reflects the fact that few people currently use the option to transfer their money to private managers themselves. He says there are plans to work with the Ministry of Labour to encourage more savers to take part.
Where private managers will be able to invest the money
The plan is to start with government securities — instruments through which the government borrows money. The proposal is then to gradually add corporate securities and shares. Corporate bonds allow companies to borrow from investors, while shares give investors a stake in a company.
Tursunkhanov expects private managers’ involvement to support market liquidity and issuers’ securities offerings. Put simply, it should become easier for market participants to buy and sell securities, and for companies to raise money by issuing them.
How much money will be transferred and how companies will be chosen
The amount to be transferred initially has yet to be decided. The National Bank intends to select licensed Kazakhstani managers through a competitive process. This will require setting requirements for companies, a selection procedure and rules for assessing performance.
Tursunkhanov says six managers currently operate in the market. Any further expansion of their role will depend on investment performance, risks and the readiness of the infrastructure. The plan is to increase the volume of assets and broaden the range of permitted instruments in stages.
When transfers will begin and who will retain control
According to Tursunkhanov, the National Bank’s governor has set a provisional target: implementation is planned to begin by the end of 2027. However, in its written response, the National Bank said the launch date had yet to be determined. Work is at an early stage, so this target cannot be treated as an approved date.
Before the launch, rules must be established, risk management mechanisms defined and infrastructure prepared. The National Bank’s position is that it will retain responsibility for managing pension assets and overseeing their safekeeping. It says changes will be introduced once mechanisms are in place to protect savings and supervise the companies involved.
Put simply
The National Bank is preparing a way to entrust private companies with managing part of the pension portfolio. Savers will still be able to choose their own manager, while the bulk of assets will remain under the National Bank’s management.
If you are considering transferring your savings, distinguish between your existing right to choose and the future mechanism. To assess the new model, wait for the approved terms: how much will be transferred, the requirements for managers and how oversight will work.
