A pension annuity is a contract with a life insurance company under which pension savings are transferred from the UAPF (Unified Accumulative Pension Fund) to the insurer to fund lifetime payments. Eligibility depends on age, the source of the savings and whether they are sufficient.
- What is a pension annuity?
- The price of the question
- Concluding a pension annuity contract
- Pros and cons of a pension annuity
- Key benchmarks for 2026
- Why there is no single sufficiency amount
The classic pension scheme works like this. Every month we contribute 10% of our salary towards our future pension, and we receive the accumulated money only when we retire. The retirement age is clearly set by law: for women it starts at 58, and for men at 63. However, there is another way to receive the money saved during your working life. An alternative to a monthly pension from accumulative pension funds (APFs) is a pension annuity — a product of life insurance companies (LICs).
"Under the law, the minimum payment under a pension annuity must not be lower than the minimum pension, which since 1 April 2020 has been 40,441 tenge"
Changes in pension annuities in 2021
In 2021 a pension annuity can be arranged on new capital sufficiency terms, as shown in the table below.
Documents required to conclude a pension annuity contract
1. Identity document
2. Identity documents of the heirs
2. Statement from the pension fund
3. Bank details (IBAN account)
What is a pension annuity?
Receive your savings from pension funds or from insurance organizations? Everyone can make this choice. The advantage of a pension annuity offered by insurers is that the pension can be received three years earlier than the standard age and in parallel with payments from the APF. That is, a person who keeps working until the official retirement age and keeps contributing 10% of salary as before is at the same time building additional savings in the APF. This means that on reaching retirement age he or she will receive money both from the LIC and from the APF (the latest savings). Pension annuities are attractive because, first, they serve as an alternative to accumulative pension funds. And second, they provide money for those who retired earlier than the established date. Citizens with a work record before 1998 receive a pension from the State Center for Pension Payments (SCPP) plus a lifetime pension annuity payment. For example, if you are 55 or older, you can arrange a pension annuity and start receiving a pension now, or wait for the official retirement age and then choose whether to receive a lifetime pension through a pension annuity or withdraw your savings from the APF. Under the law, a Kazakhstani's pension is calculated only up to the age of 79, and only provided that about 3 million tenge has been accumulated in the APF account. This means that those over 80 must rely on the help of their relatives. Everyone else, whose savings are smaller, will receive money only until their limit runs out. The solution to this problem can be a contract with an insurance company for a pension annuity (PA), which provides for a pension to be paid for life, regardless of whether the savings have run out. While a life insurance contract protects a person (that is, his or her heirs) against early death, an annuity protects the insured if he or she lives a very long time, because the insurance company in effect undertakes to support the person who bought the annuity throughout his or her life.
The price of the question
The only condition for arranging an annuity is the sufficiency of pension savings. That is, by the time of retirement — in this case, 55 — a certain amount must be accumulated. For example, at the State Annuity Company the threshold amount of savings for buying a pension annuity contract this year is 9.5 million tenge for men and 13 million tenge for women. In addition, because an annuity is a long-term product — we invest money in order to receive a pension for life, which is at least 20 years or more — the funds we pay are invested by the insurer in securities. Besides the monthly part of the amount we paid in, we regularly receive investment income earned by our money on the account. According to experts, this averages 4.6–5.5% per year.
Concluding a pension annuity contract
To conclude a pension annuity contract, you need to fill in an application to the insurance company. A statement from the APF is attached to it. These papers are sent by the fund to the insurance company for the calculation. If the savings are sufficient and the person is satisfied with the calculation of future annuity payments, the contract is signed in three copies. One stays with the company, the second with the client, and the third with the APF. A contract with an insurance company to purchase a pension annuity can be concluded only from the age of 55. But this can be done only if pension savings are sufficient. The pension fund must transfer the money to the insurance company, and the client starts receiving payments from the LIC from the following month. Thus, you need to submit an application to the insurance organization and attach copies of your identity document, taxpayer number (RNN) and the statement from the accumulative pension fund.
Pros and cons of a pension annuity
But with all these advantages of a pension annuity, there are also certain risks. In particular, if the insurance company undertakes to pay the pension for life, the recipient loses the right to pass it on by inheritance, which is provided for with payments from the APF. True, insurance companies offer various options — for example, receiving the pension not for life but over a guaranteed period. For instance, a contract is concluded for 15 years, but if an insured event happens to the recipient, the pension continues to be received by the heirs he or she has named. In any case, as pension savings grow, the choice — to buy a pension annuity or to receive money from the APF — will become ever more pressing. After all, if a person with the minimum permissible amount of pension savings comes to an insurance company now, the pension paid to him or her each month will also be small. And one more thing. Contributors who have concluded a pension annuity contract are free to choose the insurance organization. But remember: if something about the company's work does not suit you, by law you can change it only two years after concluding the contract. So the choice of insurer must be taken seriously. And under the same legislation it is impossible to return from an insurance company back to an accumulative pension fund. Take a man aged 63 whose pension savings amount to 12 million tenge. Receiving a pension from the pension fund, he can count on 600,000 tenge a year. 12 million tenge will last him 20 years. At 83 our hero will lose this source of income. The pensioner can increase his annual amount, but this automatically shortens the payment period. For example, receiving 1,200,000 tenge a year would last him 10 years, that is, by the age of 73 his pension money will have run out. Now consider another scenario. If he arranges a pension annuity, he can receive 600,000 tenge a year for life plus investment income. Another feature of receiving a pension from an insurance company is that the pensioner can set the frequency of his payments himself, that is, decide whether it is more convenient to receive the pension monthly, quarterly or annually.
Terms of the pension annuity:
- You can conclude a pension annuity contract, under which you transfer your savings from the pension fund to a life insurance company and start receiving payments.
- A pension annuity contract is concluded by persons who have reached the age of 55 and military personnel who have retired on a length-of-service pension. Military personnel may transfer 50% of their savings and conclude an annuity contract for a term up to reaching retirement age; in other cases a lifetime pension annuity is concluded.
- A lifetime annuity means payments are made for as long as the recipient is alive. Payments do not end when a certain age is reached, and do not end if the total of payments exceeds the amount of savings transferred, i.e. they are made for life.
- The amount of the pension annuity payment under lifetime annuities on the date the annuity contract is concluded cannot be lower than the minimum pension. Payments are made in equal instalments at a set frequency, for example monthly.
- Under pension annuity contracts, the heirs are refunded the insurance premium minus the payments actually made.
- To conclude a pension annuity contract, you submit an application for the contract and sign the pension annuity contract.
Within ten calendar days you notify the accumulative pension fund, providing one original copy of the pension annuity contract.
Within thirty calendar days of receiving your notification, the accumulative pension fund transfers the full amount of savings to the life insurance company in a single payment, after which payments begin immediately.
What to do if the contributions on your account are not enough?
If pension savings formed from mandatory contributions or mandatory occupational contributions are insufficient, voluntary contributions may be used.
That is, you can simply top up your pension account up to the required amount, provided you have the financial means
Features of the annuity:
- Lifetime payments
- The contract may set a "guaranteed period" for heirs of up to 25 years
- Option to receive an additional lump-sum payment
- Payments can start as early as 50–55 (compared with the pension system: from 59 for women and 63 for men)
- Indexation — subsequent monthly payments increase every year by 5% or more
For any further questions about life insurance, you can contact our company's offices.
Key benchmarks for 2026
In 2026 the general retirement age is 63 for men and 61 for women; the women's age remains at 61 until 2028. If savings are sufficient, a pension annuity makes it possible to start receiving payments earlier than the general retirement age.
As a general rule, the right to a pension annuity funded by mandatory pension contributions arises for men from the age of 55 and for women from the age of 53. There is also a deferred pension annuity: the contract can be concluded from the age of 45, and for savings funded by mandatory occupational pension contributions, from the age of 40, provided there are at least 60 calendar months of such contributions. Payments begin at the age set by law and by the contract.
Why there is no single sufficiency amount
The required amount depends on sex, age, the date of conclusion, the start of payments, indexation, the guaranteed period and other parameters. That is why an advertised figure or a table from another year is no substitute for a personal calculation. The company applies an approved methodology and current social indicators.
The minimum insurance payment under new contracts is linked to the subsistence minimum. Sufficiency is also affected by the expected duration of payments: the earlier they start, the more capital is usually required.
Who arranges a pension annuity
A pension annuity contract is concluded only by a life insurance company holding the relevant licence. A bank, consultant or agent may explain the product, but does not become the insurer and does not assume the lifetime obligation.
Services in compulsory types of insurance are provided only by insurance companies holding the relevant licence. A pension annuity is a regulated insurance product, so before transferring your savings you should check the legal entity and its permitted classes of business.
How the process works
- Check the amount and structure of your savings in the UAPF.
- Request calculations from several life insurance companies.
- Compare the size of the first payment, indexation and the start date.
- Study the guaranteed period and payments to heirs.
- Check the surrender value and the terms for changing the contract.
- Sign the contract and the application to transfer the savings.
- Keep the payment schedule and the full set of documents.
What to compare in the offers
- the amount and frequency of the lifetime payment;
- annual indexation;
- the start date of payments;
- the guaranteed period;
- the procedure for payments to heirs or named persons;
- the amount of insurance premium transferred;
- the surrender value and the possibility of returning part of the funds to the UAPF;
- the insurer's financial stability and licence;
- service and the procedure for changing details.
Joint pension annuity
A joint annuity allows spouses or close relatives to pool their savings to calculate lifetime payments for two insured persons. The mechanism can be useful when one participant has surplus savings while the other does not have enough for a separate contract.
The terms for each recipient must be set out in the contract: the amount of payments, start dates, the guaranteed period and the consequences of the death of one of the annuitants. Before concluding, the joint option should be compared with two separate contracts and with payments from the UAPF.
Advantages of a pension annuity
- payments are made for life;
- the option to start receiving income earlier than the usual pension;
- indexation provided for by the contract;
- the possibility of a guaranteed period;
- a joint annuity option;
- transfer of longevity risk to the insurer.
Risks and limitations
- the transferred savings become an insurance premium and are managed under the rules of the contract;
- the decision is hard to assess without comparing long-term scenarios;
- inflation can reduce the real purchasing power of payments;
- the terms of termination and the surrender value are limited by law and the contract;
- the insurer's financial stability matters over the long term;
- old sufficiency tables quickly become outdated.
Pension annuity or UAPF payments
An annuity transfers longevity risk to the insurance company and provides a lifetime income stream under the contract. UAPF payments are calculated under the rules of the pension system and depend on the remaining balance. The choice requires calculating several scenarios: life expectancy, indexation, inheritance and the need for liquidity.
Do not decide solely on the size of the first payment. It is important to assess the overall income structure, guarantees for the family and the consequences of transferring the capital.
In brief
A pension annuity in 2026 remains a way to turn sufficient savings into lifetime insurance payments. The historical 2021 material below is kept for comparison, but all amounts and age conditions must be re-checked. Request several personal calculations and study the contract carefully before transferring funds from the UAPF.