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Kyrgyzstanis to be able to spent pension savings on mortgage loan

Social Fund of Kyrgyzstan proposes to allow citizens to spend the money paid to the State Pension Savings Fund on an initial mortgage payment and covering of expenses in case of serious illness. The fund submitted a corresponding draft resolution for public discussion.

The background statement says that the funds can be allocated for the purchase of housing only in case of participation in the state mortgage program, and the disease should be on the list determined by the Government.

According to the State Mortgage Company, the initial payment is about 50,000 soms on average. Therefore, it is proposed to provide the right to payment to persons whose retirement savings exceed this threshold. In addition, the insured person will not receive cash, funds will be transferred to certain bank accounts. The Social Fund believes that this will help to prevent their waste.

The Social Fund also specified a payment mechanism in case of serious illnesses that pose a serious threat to life and require expensive treatment. Together with the Ministry of Health they determine the list of diseases for receiving the payments. At the same time, a draft certificate on the presence of such a disease was developed in order to avoid corruption.

The fund believes that the proposed measures will encourage citizens to saving of funds.

The mandatory savings element in the pension system of Kyrgyzstan was introduced in 2010. The accumulated part of the pension is formed from compulsory insurance contributions paid by the insured to the State Savings Pension Fund in the amount of 2 percent of the income accrued by an employer.