Comparative standing of Kazakhstan pension system performance: learning policy lessons from Canadian experience

Abstract

The study examines the current state of Kazakhstan public pension system in terms of its performance and asset structure as compared to that of the OECD countries as well as structural and regulatory issues confronting the national pension market as an impediment to ensuring adequate retirement savings of the population. The underlying issue to be addressed is current low real rate of return by the national pension fund, which translates into its future inability to provide for pension payouts that would meet retirement needs of the nation accounting for recent elevated inflation rates. As a likely solution, the paper investigates the Canadian pension system as a successful case of pension market ecosystem embodying a three-layer pension market structure that fuels diversified sources of pension payouts thus ensuring a sustainable flow of pension income to Canadian retirees. In particular, it advocates for introducing group (employer-based) and private (individual) registered pension programs of investments that have for long been adopted in developed countries demonstrating their effectiveness in generating substantial supplementary sources of pension income. As a prerequisite, favorable legislative and taxation frameworks should be adopted to secure motivation by both the employers and working citizens to contribute to the respective pension plans. By way of learning Canadian experience, suggestions as per prospective ways to reconfigure the Kazakhstan pension system are made that may solidify its overall performance and sustainability to ensure solid real rate of return and consequently adequate pension payouts to its future retirees.