Sound investments into your future Country Overview The The - PowerPoint PPT Presentation

Sound investments into your future

Country Overview The The Republic Republic of of Kazakhstan Kazakhstan is a transcontinental country in Central Asia and Eastern Europe, the vast majority of its territory being located in Central Asia. With its territory of 2,727,300 sq km (1,053,000 sq mi) ranked as the 9 th largest country in the world, it is also the world's largest landlocked country. Kazakhstan is a member of the CIS. Capital city – Astana; largest city – Almaty (former capital). National currency – Tenge (KZT).

Country Overview (continued) Politics and Economy Population Population: 16.5 mln. people Age 0-19 – 33% The Republic of Kazakhstan Structure 20-39 – 33% is a unitary state with (2010) 40-59 – 24% presidential regime 60 & older – 10% Working population (APFs’ members): 8.2 mln. people Average monthly income (Jul. 2011): Main industry: Oil & Gas USD 640 ( 9 th place in the world ) Retirement age: men – 63 women – 58 GDP: Longevity ( 2010 ): average – 68.4 years Jan-Jun 2011 – 107.1%, or $ 69.29 bn 2010 – 107.0%, or $148.05 bn men – 63.5 women – 73.3 2009 – 101.2%, or $115.31 bn Natural population growth rate 2008 – 103.3%, or $133.44 bn increased from 6.22% ( 2003 ) 2007 – 108.9%, or $104.85 bn to 13.35% ( 2010 )

Pension System in Kazakhstan Pension System in Kazakhstan 1997 1997 - reform of the pension system in Kazakhstan and establishment of the first “State Accumulative Pension Fund” (Gosudarstvenny Nakopitelny Pensionny Fond) which then became the APF “GNPF”, JSC New pension system is based on the three pillars: PAYG PAYG pillar pillar , the former Soviet Union heritage based upon the “solidarity of generations” where the State budget is a source of pension distributions by means of taxes and other budgetary receipts. Pension distributions amount depends on the employment duration. Currently, this pillar covers those who had been employed for at least six months prior to January 1, 1998. Compulsory Compulsory defined defined contributions contributions accumulative accumulative pension pension plan plan (99.77% of all accumulated pension assets as of 1 July 2011). Pension contributions fixed at 10% of the gross monthly income are paid by all employed citizens of Kazakhstan and foreign stateless individuals who established permanent residence in Kazakhstan, to their individual accounts in one of the APFs selected in contributors’ discretion. Contributors have the right to transfer their savings from one APF to another twice a year, but all savings of each member must be kept in one APF at a time. plan embracing voluntary and voluntary-occupational pension Voluntary Voluntary accumulative accumulative pension pension plan contributions. This pillar is less developed.

Pension System in Kazakhstan (continued) Pension System in Kazakhstan (continued) As of September 1 st , 2011, there are 11 Accumulative Pension Funds (APF) operating in Kazakhstan. The APFs in Kazakhstan are Accumulation of licensed to act also as the Asset Management Companies (AMC). Pension Assets & They manage pension assets of their members (contributors), and Asset Management also have their own assets and capital that are accounted for separately ( Chilean Chilean model model ). Pension assets are accumulated and accounted for based on the Unit Unit-Linked Linked Plan Plan , i.e. the cash value of pension contributions Unit-Linked Plan varies according to the current net asset value of the underlying investment assets. It allows protection and flexibility in investment. The APFs have three income sources three income sources : 1. Monthly commission fee on accumulated pension assets Income Structure (≤0.05%, GNPF’s current fee is 0.0475%) Monthly commission fee on investments return (≤15%, GNPF’s 2. current fee is 15%) 3. Return from investments of own assets

Pension Market Performance Pension Market Performance Pension Assets 17 194 mln. USD Individual Contributors’ Accounts (01.09.2011) 2 520 024 mln. KZT Voluntary Compulsory Voluntary Occupational Average annual growth rate for the last 3 years – 21% 1998 3 752 386 Pension assets, mln. KZT Pension assets growth rate, % 1999 2 994 513 2000 3 715 535 2001 4 630 205 22 071 2,500,000 2002 5 399 320 25 084 160% 2003 6 164 316 27 364 140% 2,000,000 2004 6 974 437 30 157 2 764 120% 2005 7 613 369 32 336 3 297 1,500,000 100% 2006 8 537 712 32 978 3 752 80% 2007 9 223 712 40 904 3 848 1,000,000 60% 2008 9 613 112 41 499 4 030 40% 2009* 7 732 128 41 682 4 076 500,000 20% 2010 7 989 782 39 534 4 045 0 0% 01.09.2011 8 117 097 38 376 4 088 * zero-balance and double accounts were eliminated Average Pension Savings Per 2 118 USD Accumulated Net Investment 4 270 mln. USD Contributor (01.09.2011) 311 ths. KZT Income (01.09.2011) 625 786 mln. KZT Net investment income, mln. KZT Net investment income growth rate, % 80% Average Pension Savings Per Сontributor, mln. KZT 600,000 70% 0.28 0.31 60% 500,000 0.24 50% 400,000 40% 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.09 0.11 0.13 0.15 30% 300,000 20% 200,000 10% 0% 100,000 -10% 0 -20% USD 1 = KZT 146.56 ( average ForEx rate in August 2011 )

Kazakhstan APFs (01.09.2011) Kazakhstan APFs (01.09.2011) Atameken GNPF Kazakhmys Republic Capital Grantum NefteGazDem Ular Umit Astana GNPF GNPF Kazakhmys Republic Eurasian APF HBRK APF Otan Atameken Grantum NefteGazDem Ular Umit Capital HBRK APF Otan Gross Investment Return Pension Assets, US$ mln (J an-Aug 2011), US$ mln Ular Umit , -$23, -4% Otan, - Republic, $15, Otan, $486, 3% Capital, $906, Republic, $475, Ular Umit , $4, - 3% 5% Grantum, Atameken, 3% Capital, $35, 6% $2,789, 16% 1% $67, 12% $14, 2% Grantum, Astana $1,477, 8% $849 GNPF, $113, Atameken, Astana 5% 20% $531, 3% $34 NefteGazDem, 6% $640, 4% Kazakhmys, GNPF, $3,065, $164, 1% 18% NefteGazDem, $25, 5% HBRK APF, Kazakhmys, $6, $223, 40% HBRK APF, 1% $5,813, 34%

APFs’ Investment Portfolio APFs’ Investment Portfolio (01.09.2011) (01.09.2011) Total Pension Assets US$17.2 bn. APFs' Portfolio Structure, in USD '000 Refined Precious Cash and Other Assets, Deposits in the M etals, $836,794, $289,262, 2% National Bank of the 5% RK and the Second-Tier Banks, $1,260,357, 7% Securitites of the M inistry of Finance of the RK, the National Bank of the RK and the Local Authorities of the RK , $7,264,271, 42% Nonpublic Domestic Shares and Bonds, $4,917,459, 28% International Financial Nonpublic Foreign Foreign Organizations Government Shares and Bonds, Securities, $814,411, Securities, $1,549,619, 9% 5% $290,984, 2%

Regulation Regulation The APFs’ activity is licensed and regulated by the Committee Committee of of the the National National Bank Bank of of the the Republic of Republic of Kazakhstan Kazakhstan for for Control Control and and Supervision Supervision of of the the Financial Financial Markets Markets and and Firms Firms There are three three main main prudential prudential regulations regulations established and controlled by the Committee: Prudential regulations Limits ≥ 0.04% K 1 1 minimum capital requirement K2 annual average weighted K2 One APF’s K 2 ≥ 70% of average weighted K 2 of all APFs investment return benchmark for the last 60 months Limits on pension assets invested Limits on pension assets invested -- GRK Securities ≥ 30% of pension assets; into non-public securities and and -- Foreign Gov. Securities ≤ 10% of own assets per country; pension assets deposited with pension assets deposited -- Securities of IFO and Banks for ≤ 10% of own assets per each emitter ; second-tier banks Development -- Domestic Shares ≤ 10% of each emitter’s stock ; -- Domestic Debt Securities ≤ 25% of each emitter’s own equity -- Foreign Shares ≤ 10% of each emitter’s stock ; ≤ 25% of each emitter’s own equity ; -- Foreign Debt Securities -- M utual Funds Shares (subject to ≤ 1 0% of each emitter’s assets the investment rating availability)

GNPF Shareholders GNPF Shareholders The National Bank of the Republic of Kazakhstan* 90 90,01 01% % *GNPF is the only APF with direct GRK participation through the National Bank’s share The European Bank for Reconstruction and Development 9,99% 9,99%

GNPF Privatization GNPF Privatization The National Bank of the RK along with EBRD now intend to sell the control stock of GNPF to a new Strategic Investor , and conduct a search for this purpose. The main objective of GNPF privatization is not the profit gain, but the strengthening of the Fund’s market position thanks to a foreign investor’s expertise and experience, namely by:  enhancing corporate management  advancing internal risk management system  sharing best practices in investments  providing access to the global markets