Kazakhstan has decided to sharply tighten access to early pension withdrawals amid worries over the country’s housing market, inflation outlook and long-term retirement security.

Revised rules, in effect since June 5, mean contributors to the Unified Accumulative Pension Fund (UAPF) can only withdraw pension savings above a significantly raised minimum sufficiency threshold. The new thresholds have risen by up to 79% depending on the contributor’s age, substantially limiting the number of citizens eligible to access funds before retirement.

A 20-year-old contributor must now retain at least Kazakhstani tenge (KZT) 6.67mn (approximately $13,720) in pension savings before being allowed to withdraw any excess funds. The threshold rises to KZT 9.75mn for a 30-year-old and KZT 13.37mn ($25,700) for a 40-year-old. 

The latest changes mark the most significant recalibration of a policy first introduced in 2021, when President Kassym-Jomart Tokayev’s administration opened the pension system to early withdrawals for housing improvements, mortgage repayments and medical expenses. At the time, the initiative was presented as a mechanism to address urgent social needs while strengthening public confidence in the pension system.

The programme proved immediately popular – government estimates initially suggested that around 721,000 people, or 7.9% of Kazakhstan’s working population in 2021, would qualify to use part of their pension savings, with total potential withdrawals reaching KZT 1.4 trillion ($2.9bn), but actual demand quickly exceeded expectations.

From January 2021 to April 2022, authorities processed 1.3mn applications for housing-related withdrawals worth KZT 3.1 trillion, equivalent to roughly 3% of gross domestic product.

Since the programme’s launch, total withdrawals have reached approximately KZT 5.8 trillion, with most funds directed towards housing purchases, mortgage repayments and renovations. Medical expenses, including dental treatment, became the second-largest category.

Kazakhstan’s annual inflation reached 12.3% in 2025, yet housing prices rose substantially faster across all segments. Prices in the primary housing market increased 15.7% y/y in 2025, while secondary market prices rose 14.6% y/y. Rental housing prices climbed 13.1% y/y.

Some cities in the Central Asian state recorded particularly sharp increases. In the primary market, prices in Konaev and Pavlodar surged 22.9% y/y, outpacing major cities including the country's commercial capital, Almaty, where prices rose 19.8% y/y, and the capital, Astana, where prices increased 17.4% y/y.

In the secondary market, Almaty recorded the strongest growth, with prices rising 25.4% y/y. Rental markets also showed growing pressure. Year on year, rents in Pavlodar rose 42.9%, while Petropavl saw a 40.9% increase and Aktobe recorded growth of 30.4%.

Local analysts believe several factors drove this surge, including tighter regulation of shared construction, inflationary pressures linked to construction costs and anticipated tax changes. However, pension withdrawals remained one of the most powerful demand-side drivers.

Authorities have repeatedly revised pension withdrawal thresholds since 2022 in an attempt to contain market overheating while preserving retirement savings. Though withdrawals for housing purposes initially fell from roughly KZT 2.5 trillion in 2021 to KZT 700bn in 2022 as tighter restrictions took effect, the demand for pension fund money jumped again in the subsequent years. For instance, payments from the UAPF for housing purposes rose 83% in the first 11 months of 2025 alone.

In total, around 64% of all early pension withdrawals were channelled into housing purchases, sharply boosting mortgage lending and property transactions. In 2021, mortgage issuance rose 88.9% compared with 2020, supported by continued state housing programmes including "7-20-25" and "Baspana Hit".

Policy ‘disproportionately benefitted higher-income buyers’

Analysts have noted how rising prices disadvantaged many middle-income buyers, particularly those who had spent years saving for deposits through institutions such as Otbasy Bank. As prices surged, many prospective buyers found themselves priced out of the market despite years of preparation.

Maksat Halyk, an economist who has criticised the policy’s implementation, told Azattyq that the pension withdrawal programme contributed to broad inflationary pressure and deepened affordability challenges.

“The main problem is not the pension threshold itself, but the low income of the population,” Halyk reportedly said. “If the government raises these thresholds without increasing household income and purchasing power, it creates additional pressure for ordinary citizens.”

Halyk argued that while the policy offered immediate liquidity for some households, it disproportionately benefitted higher-income earners with larger pension balances, leaving low-income workers with limited access to the programme’s benefits.

He also said pension withdrawals accelerated price growth across the economy.

“Money from the pension fund entered the market very quickly and contributed to rising prices,” he said. “That became one of the factors accelerating inflation.”

Are the changes enough?

Halyk Finance expects Kazakhstan’s housing market to remain in “growth territory” in 2026, but at a slower pace, DK News reported earlier this year. Higher pension withdrawal thresholds, tighter mortgage lending conditions and upcoming tax changes are all expected to weigh on demand – though Halyk Finance was basing its calculations on thresholds introduced in January, the latest increase in thresholds would remain in line with the expectations.

When asked whether housing prices in Almaty and Astana would fall over the next one to two years and whether if they failed to do so it would mean that the “pension-fund-driven housing bubble” was a myth, Kazakh economist Rassul Rysmambetov told DigitalBusiness.kz on June 25 that expectations should not be based solely on the withdrawal limit changes. 

“Unified Accumulative Pension Fund was never the sole reason behind rising housing prices,” Rysmambetov reportedly said. “Pension money was only one factor that accelerated the process. But prices are also unlikely to fall quickly: the market has accumulated a large stock of unsold properties built at high cost.”

“Other key drivers include urbanisation, population growth in major cities, a shortage of quality land plots, rising construction costs, overall inflation, and investment demand,” he added.

Additional pressure may come from Kazakhstan’s new Construction Code, signed into law on January 9 and due to take effect on July 1. The legislation imposes stricter requirements on developers and increases regulatory oversight, measures expected to raise compliance costs and potentially squeeze smaller developers.