Adjustments to Pension and Benefits Payments in Kazakhstan to Account for Inflation.
In a recent government meeting, the Minister of National Economy of Kazakhstan, Alikhan Smailov, revealed that pensions and certain benefits will be adjusted by around 9%, in response to rising prices. This comes after a period of ambiguity regarding the indexing of these payments.
The government has now approved modifications to the republican budget with an inflation corridor of 8-10%. Smailov explained that the indexing of pensions and benefits is contingent on this budgetary framework.
It's worth noting that Kazakhstan's approach towards social and pension benefits against the backdrop of inflation involves measures to adjust these payments to maintain the purchasing power of recipients. For instance, in 2025, social benefits, including pensions, were increased by 6.5%. However, this indexing falls below both the upper limit of the inflation corridor and the current inflation rate, offering only partial compensation for price hikes.
Moreover, additional support is extended to vulnerable populations. Families below the poverty line receive extra benefits for young children, while families raising children with disabilities receive a monthly care allowance. The National Fund for Children, although not exactly a pension or benefit in the traditional sense, represents a long-term financial support strategy, channeling 50% of annual investment income from the National Fund into savings accounts for children upon reaching the age of 18.
In comparison, the inflation forecast for 2025 sits within the 8-10% range, but actual inflation has been hovering near the higher end of this spectrum. The indexing rate, however, remains significantly lower.
Interestingly, the National Bank of Kazakhstan has set a benchmark interest rate of 16.5% for the same period. Yet, despite these rates, the current pension and benefit indexing rates do not fully match the rate of inflation, falling short of compensating for the rising cost of living.
In summary, while Kazakhstan's government has implemented steps to index pensions and benefits, these adjustments do not fully account for the inflation rate, leaving recipients to grapple with escalating costs of living.
The government's modifications to the republican budget, with an inflation corridor of 8-10%, will affect the indexing of pensions and benefits, as explained by Minister Smailov. In light of this, the indexing of these payments may not fully compensate recipients for the rising cost of living, as the rate of inflation remains higher.
