Kazakhs to Cut Out Middlemen as Pension Overhaul Ends ‘Rat Race’

Kazakhstan’s central bank said it needs no intermediaries in managing 3.9 trillion tenge ($21 billion) of retirement savings after assets were transferred into a single state-run pension fund.

The central bank plans to invest 85 percent of its free cash into government debt and securities issued by state-run companies as well as into bank deposits, Chairman Kairat Kelimbetov told reporters today in the country’s commercial capital, Almaty.

“We don’t need intermediaries in any of these areas,” he said. Kazakh pension funds “hadn’t worked very well, and didn’t live up to the high level of trust.”

Kazakhstan is forming the unified pension fund by consolidating retirement savings that were under the management of 11 private funds. The state-owned entity, known as the ENPF, last month started to absorb assets from the last pension fund, which was owned by Halyk Bank and controlled more than 30 percent of the market, according to its website.

“It was a rat race, when pension funds, banks and issuers, affiliated with each other, created a channel for money flow,” Kelimbetov said, adding that the central bank plans to write down 100 billion tenge of pension assets. “And Kazakh citizens paid for this race.”

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