What Does Social Insurance Cover?

The social insurance system in Kazakhstan

1. How to read this material
2. What compulsory social insurance covers
3. Historical material
4. Practical addendum: where to apply today
5. A social payment and an insurance payment are not the same thing
6. Why the amount of payment differs between citizens

How to read this material

Below, the full historical text of the publication is retained, prepared on the basis of the state of the system in 2011. It shows the stages in the development of social protection and the impact of the 2008 global financial and economic crisis. The names of programs, amounts, periods and individual rules of past years should be treated as historical data. Before applying for a payment, you must check the current conditions on the official resources of government bodies and the State Social Insurance Fund.

What compulsory social insurance covers

In the modern system, the right to social payments is linked to participation in compulsory social insurance and the receipt of social contributions. Payments are awarded when the social risks provided for by law occur, including loss of working capacity, loss of a breadwinner, loss of employment, loss of income due to pregnancy and childbirth, the adoption of a newborn child, and care of a child until the established age. The specific entitlement, period and amount depend on the grounds, the contribution records and the rules currently in force.

Historical material

Our country has a multi-level system of social protection of the population, aimed at the social security of all segments of the population, from the birth of a child to old age. Under the Address of the Head of State to the people of Kazakhstan of 19 March 2004, "Towards a Competitive Kazakhstan, a Competitive Economy, a Competitive Nation", compulsory social insurance was introduced in the Republic of Kazakhstan from 2005 as an additional form of social protection of the population.With the transition to new standards of social security, the State Social Insurance Fund (SSIF) was established in the form of a joint-stock company with 100 percent state participation. The SSIF accumulates social contributions and makes payments to participants in the compulsory social insurance system in respect of whom a social risk event has occurred. The participants in the compulsory social insurance system are employees or self-employed persons for whom employers pay monthly social contributions to the SSIF at a rate of 5 percent of the employee's income, within 10 times the minimum wage.The questions most often raised with various bodies, including our newspaper, by readers are answered by Almas Kurmanov, President of JSC State Social Insurance Fund.

— Who are the participants in the insurance market of Kazakhstan?

— On the insurance market of Kazakhstan, insurance companies operate in a competitive environment; they hold licenses from the authorized state body for the regulation and supervision of the financial market and financial organizations to carry out certain activities on the financial market. In order to attract clients, each insurance company develops various insurance products for both legal entities and individuals, which are the subject of contractual relations between the policyholder and the insurer.

As a rule, the amount of insurance premiums and of insurance payments when an insured event occurs is determined by the insurance contract. For example, every car owner, choosing an insurance company every year, must insure the car for one year. The insurance premiums paid by clients to the insurance organization are accumulated and invested on the financial market.

— Does the State Social Insurance Fund belong to the insurance market?

— The SSIF does not operate on the competitive insurance market, but deals with the insurance of social risks provided for by the Law of the Republic of Kazakhstan "On Compulsory Social Insurance".

Compulsory social insurance applies to employees, except working pensioners, and to self-employed persons, including foreigners and stateless persons permanently residing in the territory of the Republic of Kazakhstan and carrying out income-generating activity in the territory of the Republic of Kazakhstan. The obligation of employers to pay monthly social contributions is established by legislation.It should be noted that, in order to observe the basic principle of insurance — the dependence of payments on the contributions paid — the social contributions received are recorded on a personalized basis, using the social individual code. As a result, there is a certain dependence of social payments from the SSIF on the amount of the employee's income and the length of his or her participation in the compulsory social insurance system. At the same time, monthly social contributions are paid for all employees, but the recipients are only those for whom a social risk has occurred. In this way, one of the general principles of insurance is implemented — the solidarity of participation of those insured under compulsory social insurance.

— What social risks does compulsory social insurance provide for?

— Since 2005, social payments from the SSIF have been made in cases of loss of working capacity, loss of a breadwinner and loss of employment.

Since 2008, additional social payments have been introduced in support of motherhood and childhood, under the Address of the Head of State N.A. Nazarbayev to the people of Kazakhstan, "New Kazakhstan in a New World". These cover loss of income due to pregnancy and childbirth, the adoption of a newborn child, and care of a child until the child reaches the age of one year.

The amount of a social payment depends on the length of participation and the average monthly income of the participant in the compulsory social insurance system, on which monthly social contributions were paid to the SSIF. I stress that the timely and full payment of social contributions by payers has a significant effect on the amount of the social payment. That is, the amount of the social payment awarded to an employee when the above social risks occur ultimately depends on how law-abiding the employer is.

— What is the role of the SSIF when the risk of loss of employment occurs?

— In world practice, unemployment benefits are awarded to persons who have lost their jobs and are actively looking for work. In Kazakhstan, too, a necessary condition for applying for a social payment from the SSIF in the event of loss of employment is the registration of the participant in the compulsory social insurance system as unemployed with the authorized employment body.An individual may apply for a social payment for loss of employment if the employer paid monthly social contributions to the SSIF for him or her for at least six months during the last 24 calendar months before the date of registration as unemployed.

The amount of the social payment for loss of employment is determined on the basis of the social contributions paid by the payer and the length of participation in the compulsory social insurance system.

The social payment for loss of employment is awarded for a period of one to four months, depending on the applicant's length of participation in the compulsory social insurance system.Over 2005-2010, social payments in the event of loss of employment totaling 1.7 billion tenge were made from the SSIF.

Social payments in the event of loss of employment provide an unemployed person with a socially acceptable standard of living, and during this period he or she can actively look for work.

— The public is often interested in insurance against the risk of loss of employment because it is connected with obtaining loans and mortgages from second-tier banks. What role does the SSIF play in this matter?

— Second-tier banks (STBs) and insurance companies operate on the competitive financial market. For this reason, in order to attract clients, STBs develop lending rules with various conditions and requirements for the documents needed to issue loans and mortgages. These requirements are approved by the internal documents of the STBs and are aimed at ensuring that the loans and mortgages granted are repaid. If the client agrees with the STB's conditions, the relevant contracts are concluded between the client and the STB.

The STB's requirement to insure the risk of the client's loss of employment when granting a loan or mortgage serves only one purpose — repayment of the loan on time if the borrower loses his or her job. In such cases, the loan will be serviced at the expense of the insurance company with which the borrower insured the risk of loss of employment. Insurance of the risk of non-repayment of a loan in the event of the borrower's loss of employment is provided only through life insurance companies, which offer various risk insurance products on a contractual, voluntary basis.

The risk of non-repayment of loans and mortgages is not a social risk, and therefore the SSIF does not insure such risks.

— Where should one apply for social payments from the SSIF when a social risk occurs?

— When a social risk occurs, the applicant may apply for a social payment, with the relevant documents, to the branch of the State Pension Payment Center (SPPC) at the place of registration. The SPPC has branches down to the district level in the regions. This allows people not to spend time delivering documents to regional centers and cities of republican significance.

The SPPC passes the documents accepted from applicants for the award of social payments from the SSIF to the authorized body for awarding social payments — the territorial department for control and social protection of the Ministry of Labor and Social Protection of the Republic of Kazakhstan (the department). The department then decides whether to award or refuse the social payment. The department has the right to verify the accuracy of the information provided. For this purpose, it may request from the tax authorities data on the correct payment of all taxes and mandatory payments, including the payment of monthly social contributions by payers.

— What is the volume of SSIF social payments to date?

— Over 2005-2010, social payments from the SSIF amounting to about 131 billion tenge were made for the five types of social risks described above, of which 93 percent went to social payments in connection with pregnancy and childbirth, the adoption of a newborn child (children) and care of a child until the child reaches the age of one year.

— Where can one go with questions about the system of insurance against compulsory social risks?

— The SSIF attaches particular importance to information and explanatory work among the population, since the compulsory social insurance system affects the interests of the working population of the republic. The advantages of the system can be studied through the media, brochures, leaflets, posters, audio clips and video materials prepared by the SSIF.

In addition, any visitor to our website www.gfss.kz, from anywhere in the world, can obtain a consultation on questions of interest in the field of compulsory social insurance in Kazakhstan.

Staff of SPPC branches and territorial departments for control and social protection also carry out explanatory work on compulsory social insurance.

— What can you say in general about the development of Kazakhstan's social protection system over the years of independence?

— Over the years of independence, Kazakhstan has built a social security system that meets international standards. It protects every Kazakhstani and is constantly being improved, taking into account today's realities and the best world experience.The global financial and economic crisis that broke out in 2008 had a significant effect on the social and economic situation of developed countries and led to substantial cuts in their social security spending. It should be noted that the Government of the Republic of Kazakhstan, on the instruction of the Head of State, promptly developed a plan of anti-crisis measures, in particular a special Strategy for Employment and Retraining of Personnel (the "Roadmap"), aimed at ensuring employment, preventing a significant rise in unemployment, and preserving and creating new jobs. In 2009-2010, the periods of social payments for loss of employment from the SSIF were extended, depending on the length of participation in the compulsory insurance system, from two to six months.

Spending on social security was also increased by raising the amounts of social benefits and pensions. In this way, Kazakhstan, alongside a set of measures to restore the health of the financial system, which had come under the negative influence of the crisis, took steps to prevent a fall in the living standards of socially vulnerable groups of the population.

One of the main priorities of the Address of the Head of State to the people of Kazakhstan, "Let Us Build the Future Together!", of 28 January 2011 is social modernization — a new social policy aimed at raising the level and improving the quality of life of all citizens of the country and strengthening social stability and the security of the population.

Practical addendum: where to apply today

First, determine which system your situation falls under. For social payments from the SSIF, government services and information on social contributions are used. In the case of a work injury, the employer must record the incident and work with the insurance company with which the contract of compulsory insurance of the employee against accidents has been concluded. State benefits, pension payments and targeted social assistance have their own grounds and do not automatically replace one another.

What the applicant should check

• social contributions for the relevant period and the accuracy of personal data;
• the date on which the social risk occurred and the documents that confirm it;
• employment status, the employer's details and bank details;
• medical certificates or documents on the loss of a breadwinner — if they are relevant to the grounds for payment;
• the deadline for submitting the application and whether the service can be obtained online;
• whether there is an official decision, and the procedure for appealing it in case of refusal.

If contributions are missing from the records, ask the employer for confirmation that they were transferred and check the data through government services. Do not give third parties confirmation codes, your electronic digital signature or your login details for your personal account.

A social payment and an insurance payment are not the same thing

A social payment from the SSIF is awarded under the rules of the compulsory social insurance system. An insurance payment by a commercial insurance company is made under the contract and the relevant law. One life event may involve several protection mechanisms, but each requires a separate basis and a separate set of documents.

For example, in the case of an accident at work, the investigation of the work incident, compulsory insurance of the employee, social payments and other guarantees of labor legislation may all matter at the same time. Receiving one payment does not automatically mean refusal of another: the specific rules and circumstances must be assessed.

Why the amount of payment differs between citizens

The amount of a social payment is usually linked to the income on which social contributions were actually paid, the length of participation in the system and the established coefficients. Therefore, the same event does not always lead to the same amount. Incomplete or late contributions may affect the calculation, and inaccurate information may cause a delay until it is clarified.

Course of action

1. Determine the type of social risk and the date it occurred.
2. Check the records of participation in the system and of social contributions.
3. Collect the documents for the specific grounds.
4. Submit the application through an available official channel.
5. Save the reference number of your application and track its status.
6. If you disagree, request a reasoned decision and use the established appeal procedure.

Conclusion

Social insurance supports citizens' income in the event of significant social risks, but the procedure for obtaining assistance depends on the specific system. The historical overview is useful for understanding how the system developed; for a practical application, use the rules currently in force, check your contributions and submit documents through official channels.

This material is for information purposes only and does not replace an individual check of entitlement to a payment.