On October 29, 2018, the Ministry of Labor and Social Protection of the Population of the Republic of Kazakhstan held a presentation of the draft law of the Republic of Kazakhstan “On Compulsory Social Insurance” (hereinafter - the Draft Law) in a new edition for members of the Public Council.
The draft law was developed in order to implement the instructions of the Head of State in the Message to the People of Kazakhstan dated January 10, 2018 “New Opportunities for Development in the Fourth Industrial Revolution” in terms of enhancing the relationship between work experience and the size of social benefits in the system of mandatory social insurance.
The main purpose of the draft law is to strengthen the legal, economic and organizational foundations of compulsory social insurance by revising the parameters for assigning social benefits from the State Social Insurance Fund (SSSF).
Compulsory social insurance for working citizens was introduced in the Republic of Kazakhstan from January 1, 2005, as additional assistance to basic state social security.
Today, the compulsory social insurance system covers about 6 million people. In 2017, payments received more than 770 thousand people in the amount of nearly 160 billion tenges. The total amount of social payments for 13 years from 2005 to 2017 amounted to 905 billion tenges.
The draft law revised the parameters on four types of social risks: on disability, loss of the breadwinner, loss of work, and care for a child under 1 year.
In particular, to encourage more participation in the system of compulsory social insurance, it is proposed to increase the coefficients of participation by 1% for each year for members of the social insurance system who have a work experience of more than 6 years. This will lead to a fair mechanism for assigning social benefits to those who work more.
The bill also proposes to revise the definition of the average monthly income, which is the basis for calculating payments. Today, when determining the amount of payment, income for 2 years is taken into account, regardless of interruptions in work. The draft law proposes to take into account the highest amount of income for the consecutive 2 years from the last 3 years before the onset of social risk. This will allow to take into account the actual lost earnings, increase the size of payments and ensure social justice.
In addition, the draft law proposes to determine the size of payments for recipients who have lost their ability to work, depending on the individual degree of disability, and not the effective average coefficients.
Similarly, for families who have lost the breadwinner, in order to increase the coefficients of the number of dependents, it is proposed to establish a single gradation by analogy with the purpose of state benefits from the budget.
Today payments from SSIF are assigned to the gradation of dependents from 1 to 4 children, and allowances from the budget to the gradation from 1 to 6 children. In this case, the coefficients used in the context of dependents are significantly different. The use of a unified approach will increase the size of social payments to families left without a breadwinner, and especially to families with 5 or more children. For example, the effective ratio for payments from SSSF with 2 children is 0.5. It is proposed to increase this ratio by analogy with payments from the state budget to 1.49. This will lead to an increase in the average size of payments from 16,913 to 43,619 tenge. If there are 4 children in the family, then the average payment will increase from 26,327 to 67,986 tenge.
The time required to change approaches in assigning social benefits is due to the lack of incentives for greater participation in the compulsory social insurance system and the need to increase the interest of citizens in formal employment.
The new approaches proposed in the draft law are aimed at improving the well-being and protection of the social interests of working citizens in cases when they have a social risk.
The members of the Public Council discussed the proposed changes in the parameters for assigning social benefits and noted that new approaches in calculating the size of social benefits would increase both the size of social benefits and the number of recipients themselves. This, in turn, will have a beneficial effect on the well-being of our citizens and improve their quality of life.