The Model of Pension System in Chile: Transformation in Kazakhstan

Abstract

In the mid-1990s, Kazakhstan faced the need to provide reform of the pension system. The basis was the Chilean cumulative pension system. According to the Chilean
model, the burden of financial support for pensioners could be removed from the state. Considering that in the state there were 2.7 million pensioners out of
a population of 17 million, the introduction of private liability for pensions significantly reduced budgetary government spending. After 20 years of functioning of cumulative pension system in Kazakhstan, it has been fundamentally transformed. From the original Chilean model, only the basic principles have remained: the obligatory participation in the system; accumulation of a pension in one cumulative pension fund. The National Bank of the Republic of Kazakhstan manages implementing investment management of pension assets of the pension fund; establishing requirements for diversification and risk reduction when placing pension assets. In the article, the authors demonstrate that the original Chilean model has been modified tothe national conditions of Kazakhstan taking into account the constitutional proclamation of each for a pension regardless of participation in cumulative system and under the influence of the best experience of the Organisation for Economic Co-operation and Development states.