Pension Withdrawals and Inflation: How They Differ from Mortgage Lending

On pension money and inflation

The difference between the "7-20-25" mortgage program and pension savings is that "7-20-25" is a loan that has to be repaid. When a person takes out a loan, the effect on the economy is as follows: housing is purchased, but disposable income available for consumption immediately shrinks because of the loan payments, so in this case consumption falls in the future. Given that housing is not part of the consumer basket, the effect here comes through higher imports, which put pressure on the exchange rate and, therefore, on the prices of all imported goods. Withdrawing pension money, by contrast, is nothing other than spending savings, which does not reduce disposable income available for consumption in the future, and so the impact on inflation will be greater.

It should also be noted that there are no reliable statistics on how much money actually went to housing and how much went to consumption. Breaking it down, paying down debt with pension money frees up additional income for consumption. This resembles an inflationary spiral. What is more, the freed-up income raises households' creditworthiness, which means that lending to households grows, including consumer lending. Since consumer loans in the form of installment plans (where the hidden interest is built into the price of the goods) are mostly taken out for imported goods, this leads to higher imports, and therefore to pressure on the balance of payments and on the tenge exchange rate.

Part of the money went into cash-out schemes, which in turn went toward consumption and the repayment of consumer loans. These involved people buying apartments and houses from one another in order to cash out pension savings. The same reasoning applies here as in the previous point.

Part of the money went toward improving housing conditions, but this also needs to be broken down, since most of the improvements were made through purchases on the secondary market. Prices on the secondary market were pushed up, reducing affordability for those who had no savings. It is also unclear what the final sellers then did with the proceeds, and there is no guarantee that all of them put the money toward buying new housing. Some may have sent it abroad; all of this needs to be examined and analyzed.

In other words, setting aside the fact that taxes will have to be raised in the future to ensure a minimum pension for the population, pension money has undoubtedly influenced inflationary processes in the country. However, to put a figure on that influence, a thorough study is needed.