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KIOGE-2026

Why Transfer Your Pension Savings to a Private Management Company

An interview with Ruslan Zerilov, Managing Director of BCC Invest

Since 7 September, Kazakhstanis have had the right to transfer up to 100 per cent of their pension savings from the Unified Accumulative Pension Fund (UAPF) to management by private investment companies. This change significantly expands the options for those who wish to choose the strategy for managing their pension savings themselves. How to choose a reliable manager, what risks exist, and what guarantees are in place — we explore these questions with Ruslan Zerilov, Managing Director of BCC Invest.

— Why would a contributor transfer their pension savings from UAPF management to a private company? What opportunities does this open up for them?

— Transferring up to 100 per cent of one’s pension savings to private investment companies gives Kazakhstanis several new advantages. First, the contributor gains the ability to choose a management company (or even more than one) and an investment strategy, which offers the potential to earn returns different from those achieved by the National Bank.

Healthy competition within clearly defined parameters is always good for the market. Different styles of investment management, and managers’ differing views and forecasts within common rules, give the contributor a real choice. The new rules provide for building portfolios with different risk/return profiles depending on the time remaining until retirement. It makes sense to manage the pension savings of a 25-year-old and a 55-year-old differently.

Second, when pension savings are managed by a private investment portfolio manager (IPM), their performance is assessed against an established benchmark. Let me explain what this means. From 1 January 2027, Kazakhstan will abolish the state guarantee that preserves the value of mandatory pension savings against inflation.

Previously, if the return on pension savings failed to keep pace with inflation, the state made up the shortfall. Now there will be no such compensation: the state guarantees the preservation of the principal contributed, but not its purchasing power. For private companies, however, a benchmark, or reference level of return, has been established.

What is a benchmark? It is a composite indicator made up of four components with different weights for each strategy. If a manager’s return falls short of the benchmark, they are obliged to compensate contributors for the difference out of the company’s own equity capital.

Another factor is that the sufficiency thresholds for early withdrawal of pension savings from the UAPF have been raised almost twofold. This limits the ability to withdraw money for housing or medical treatment, so contributors now have both the time and the incentive to consider transferring their savings to an IPM.

— BCC Invest is one of the few companies in the market approved to manage pension assets. Tell us about your investment strategy: how does it differ from the National Bank’s strategy?

— BCC Invest has more than 20 years of experience managing client assets — one of the longest track records in the trust management market in Kazakhstan. Over this time, we have developed an approach to managing savings for contributors with a long-term investment horizon: we focus on long-term investment results without high volatility. Over the long term, we aim for a balanced result, paying attention not only to potential returns but also to the level of risk and the volatility of the portfolio. That is why, when making investment decisions, we assess the outcome not for a single period but in the context of a long-term strategy. The average return may ultimately be the same, but investors’ experience of it differs. That is why we take a conservative approach.

At present, we are focusing on fixed-income instruments — they account for around 80 per cent of assets under our chosen strategy. Given the current high interest rates, our task is to lock them in by acquiring bonds. In addition to coupon income, we anticipate additional income from the appreciation of these securities once rates begin to fall. Our results consistently match the established benchmark, and we construct the portfolio with projected longer-term returns in mind (see Information on the nominal return ratios of pension assets and the amount of compensation for the negative difference at https://www.enpf.kz).

— Could you tell us in more detail: which securities do you invest in, and how do you select them?

— The regulator has set clear requirements for the list of eligible securities and investment limits, and it is within these rules that a private manager draws up its Investment Declaration. We give preference to corporate issuers that offer a yield at or above the base rate: these include major banks, manufacturing companies, and quasi-sovereign companies. At present, we are focusing on locking in the current high yields for the medium term and are actively participating in bond offerings with terms to maturity of at least three years.

In terms of currency allocation, we are close to the benchmark’s 30 per cent allocation to foreign-currency assets. Our declaration allows us to raise this share to 40 per cent, but we do not plan to do so, given the high tenge rates and the stable exchange rate of the national currency. We take a more cautious approach to equity instruments: among local equities we select shares with growth potential, while on international markets we prefer to gain exposure through exchange-traded funds (ETFs) in order to avoid the risks associated with individual issuers.

— How should one choose a management company? What indicators should one look at?

— We advise focusing on several factors:

First — the size of the management company, that is, its assets and especially its equity capital. The scale of a company should be seen as an indicator of its ability to meet the obligations it assumes in managing pension assets. This matters because compensation for a return shortfall relative to the benchmark is paid out of the management company’s own funds, and, given the volume of assets under management, the company must be able to meet such obligations.

Second — experience and trust management products. It is worth looking at which trust management products a company offers and what long-term returns they have delivered — this reflects the maturity of its investment process and portfolio management team.

Third — the structure of the portfolio. The UAPF website provides a detailed breakdown of the portfolio for each management company. It is worth paying attention to the issuers and the breakdown by asset class — how well these match your preferences, since in effect you are joining a portfolio that has already been built.

Fourth — return figures. IPMs have been operating in the market for more than five years now, and there is now a substantial body of performance data. That said, it is important to understand that current returns do not guarantee future results — time is needed to assess them properly.

It is also worth noting BCC Invest’s position in the market here: at present, the company has the largest equity capital among IPMs, as well as some of the highest figures for total assets, net profit, and return on equity (ROE) (according to the UAPF website).

— And what about risks? What happens if your portfolio posts a loss? Does the regulator monitor these risks?

— The pension system is still developing, but at present we consider it reasonably well balanced. There is a single operator — the UAPF — and a single set of rules established by the regulator. The system has become more transparent: contributors can compare management companies, their strategies, and their returns using publicly available data. The principle of contributor anonymity has been implemented: decisions are made on the basis of clear indicators rather than through individual contact. The regulator actively monitors the activities of IPMs, and a mechanism is in place to compensate contributors for any negative deviation of returns relative to the benchmark.

The main risk for a contributor at the moment is market risk — that is, market events beyond the control of management companies: geopolitics, the global economy, epidemics, and so on. If the entire market falls, the benchmark (the reference level of return) falls with it. An IPM compensates the difference out of its own equity capital only where the market is rising while the management company’s return falls below the threshold defined by the permissible deviation from the benchmark.

— How exactly can one transfer their savings to a private management company? Do contributors need to visit your office? And where can the results then be tracked?

— It is very simple. You can transfer your savings through the UAPF mobile app or on the UAPF website: log in to the app, go to the ‘Services’ section, select ‘Transfer of savings to an IPM or return to the NBK’, and choose the amount and the management company. Detailed instructions are available on our social media or on our YouTube channel.

It is important to note that all subsequent mandatory pension contributions continue to go to the UAPF rather than directly to the chosen management company — only the amount that the contributor has placed under management is passed to it. Moreover, the transfer of funds to the management company itself is not subject to any fees.

Once an application has been submitted, the UAPF transfers the pension savings in the established manner (within 30 calendar days). The transfer is not instantaneous, because the single operator consolidates all applications and sends the funds on an anonymised basis. All information about the transferred assets and investment results will be displayed in that same UAPF app, in a dedicated tab bearing our company’s name.

You can find more detailed information about transferring your pension savings to BCC Invest, and request a consultation, on our website in the ‘Products’ section:

https://www.bcc-invest.kz/l/pensiya

If you still have questions on the subject, you can email us at: pensiya@bcc-invest.kz