Kazakhstan has made significant strides in the latest Global Pension Report by international insurance group Allianz, climbing eight positions to rank 26th out of 71 countries. The country now places ahead of China, Turkey, Singapore, Spain, and Indonesia.
According to analysts at Ranking.kz, Kazakhstan’s rise reflects improvements across several dimensions of its pension system, which is the only one in Central Asia and among the Eurasian Economic Union (EAEU) states to be included in the Allianz ranking.
Strong Performance on Global Pension Index
The Allianz Pension Index (API), which underpins the ranking, assesses 40 indicators across three sub-indices: sustainability, adequacy, and integrity of pension systems. These include factors such as demographic trends, public debt, living standards, and the financial soundness of pension institutions. Scores range from 1 (best) to 7 (worst).
Kazakhstan achieved an overall average score of 3.5, outperforming the global average of 3.7. It received particularly strong marks for sustainability (3.6) and adequacy of payments (3.2), signaling resilience and fairness in pension distribution.
By comparison, top-ranked countries include Denmark (2.3), the Netherlands and Sweden (2.6 each), and Japan (2.7). Other leading performers are New Zealand, Israel, Australia, the United Kingdom, Norway, and the United States. At the bottom were Laos, Malaysia, and Sri Lanka, all with scores above 4.6.
The Evolution of Kazakhstan’s Pension Model
Kazakhstan transitioned from the Soviet-era pay-as-you-go system to a multi-tiered pension model in 1998. The current system combines distributive and accumulative components, with payments derived from three main sources:
- State budget: Covers solidarity and basic pensions.
- Mandatory savings: Contributions to the Unified Accumulative Pension Fund (UAPF), including 10% of employees’ salaries and 5% employer contributions for hazardous jobs.
- Voluntary contributions: Optional payments by individuals or employers.
As of January 1, 2024, a new tier, mandatory employer pension contributions (MEP), was introduced. These contributions will gradually increase to 5% of wages by 2028 and apply to citizens born in 1975 or later.
Long-Term Trends and Global Context
Globally, pension systems are shifting toward accumulation-based models. In 2000, distributive pensions made up more than 65% of total payouts. By 2024, this figure is projected to fall below 50%. Kazakhstan was the first among CIS countries to adopt an accumulative system and is now seen as a regional leader in pension reform.
Allianz experts highlight the growing importance of such systems in the face of demographic change. The United Nations projects that by 2050, the global population aged 65 and over will nearly double, from 857 million to 1.58 billion. The dependency ratio is expected to rise to 26 pensioners for every 100 working-age individuals, up from 16 today.
To ensure long-term viability, experts argue for a balanced approach that combines state-funded and private accumulative elements. In Kazakhstan, approximately 2.5 million people currently receive pensions.
