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In Kazakhstan, people who take out a pension annuity can use the savings left in their UAPF account for housing without meeting the minimum savings threshold. They can take out an annuity using mandatory pension contributions from age 45, provided they have saved enough. This lets them put the remaining balance towards an apartment, but they need to assess the terms of their future payments (kursiv.media).
What happened
A pension annuity is a contract with a life insurance company. A saver transfers pension savings to the insurer, which commits to making payments for the rest of their life. Some of the savings may remain in the Unified Accumulative Pension Fund, or UAPF.
According to UAPF guidance cited by Kursiv, this remaining balance can be used to improve housing conditions or pay for medical treatment. Annuity holders are exempt from the usual requirement to keep a minimum balance in their account. This is the amount other savers must retain for their future pension.
What this means for buying an apartment
Here is an important detail: the money transferred to the insurer funds future lifetime payments. Only the savings left in the UAPF can go towards housing. Pension savings cannot simply be withdrawn as cash or transferred to a regular bank deposit account: they must be used under the established rules.
Financial expert Turar Abdi says the appeal of this option depends on a person’s age and housing plans. Savers can keep working after taking out an annuity and continue contributing to their pension account. This allows them to build up new savings in the UAPF while retaining the right to payments from the insurer.
Why age matters to the decision
Years can pass between signing the contract and receiving the first payment. Under a standard contract, men start receiving payments at 55 and women at 53. Before transferring funds, it is worth checking the age at which payments become available and how long the wait will be.
Abdi believes that taking out a deferred annuity early may result in lower future payments than leaving the money in the pension system. His comparisons depend on assumptions about returns and inflation. The returns on pension savings also matter when making the choice: future investment performance is not guaranteed.
An annuity provides payments for life, while savings in a pension account can run out. Anyone looking to buy an apartment needs to assess two amounts: how much they will need to transfer to the insurer and how much will then remain in the UAPF.
