Kazakhstan citizens have approached the Constitutional Court requesting a review of the constitutionality of the second part of paragraph 1 of Article 818 of the Civil Code. The essence of this provision is that the insurance premiums paid by the policyholder are considered the property of the insurer.
The policyholder entered into a pension annuity contract with an insurance company. He transferred the insurance premium (his pension savings) to the insurer, who in return committed to pay him a specified amount monthly for life.
After the policyholder's death, the payments were transferred to the beneficiary. The heirs of the deceased demanded the return of the remaining pension savings of their parent, but the insurance company refused, citing legislation.
The heirs believe that pension savings should be inherited and that the legal norms deprive them of their property.
The Constitutional Court stated that the insurance premium is the payment made by the policyholder for insurance protection in the form of insurance payouts. Under these conditions, there is no forced expropriation of property. The money received by the insurance company is considered its income, and it can dispose of it as it sees fit.
The insurance company is obligated not to return the insurance premiums, but only to pay the due insurance amount monthly. The Constitutional Court did not recognize the norm as unconstitutional but recommended that the government revise the legislation to consider the rights of policyholders and their heirs. In particular, the court suggested clarifying the mechanisms for transferring rights to the savings after the policyholder's death.
The court also noted discrepancies between the Civil Code of the Republic of Kazakhstan and the Social Code. For instance, during the policyholder’s lifetime, he can transfer the money to another insurance fund or return it to the Unified Accumulative Pension Fund (UAPF), but after death, these amounts automatically go to the insurer.
A pension annuity is a type of insurance contract under which a person (the policyholder) makes a one-time transfer of their pension savings to an insurance company in exchange for lifetime monthly payments after retirement.