The effect of private pension scheme on savings: A case study for Turkey (original) (raw)

Mind the gap: Turkish case study of policy change in private pension schemes

Borsa Istanbul Review, 2018

Inadequacy of domestic savings in Turkey limits the potential for sustainable growth in the long-term and exacerbates the vulnerabilities associated with dependency on volatile foreign capital flows. The private pension system that was designed to complement public pension system demonstrated limited impact on savings rates. Thus, former tax incentives are replaced by matching contributions as of 2013. Our paper aims to assess the effectiveness of the recent incentives introduced to the private pension system in Turkey. We find that the state contribution has positive significant effect on the number of participants by using alternative asset returns and a dummy variable for state contribution in two samples covering different time periods. We analyze the dynamic time varying interaction between the state contribution and the number of participants in our second sample that focus on post reform period. The model estimated with the dynamic Kalman filter indicates that the positive effect of the state contribution on the number of participants tends to decline slightly in time. We conclude that the fund management in the private pension system should be improved in order to make use of the state incentive efficiently.

An Overview of Voluntary Private Pension Funds in Turkey

Finansal Araştırmalar ve Çalışmalar Dergisi, 2021

We provide an overview of the voluntary pension fund market in Turkey by starting with recent developments in the global pension markets and then focusing on the pension fund reform in Turkey and the following developments since 2003. Findings from the literature indicate that the reforms on the introduction of voluntary pension funds in Turkey have positive implications for the overall national savings rates and capital market development. Voluntary pension funds create extra income for beneficiaries after their retirement. However, redesigning the system in a simplified structure is necessary in order to increase participation, inclusion and also to ensure persistency.

The crisis in the Turkish pension system: a post Keynesian perspective

Journal of Post Keynesian Economics, 2013

The Turkish pension system began experiencing some structural and fiscal difficulties in the mid-1990s: increasing dependency ratio (e.g., number of beneficiaries per active contributors) and budget transfers to close the deficit in the system. These trends resulted in a crisis in the system, and it thus underwent a major transformation as reforms moved the traditional pay-as-you-go (PAYG) scheme significantly toward privatization and personal responsibility for assuming risk. These changes reflect the interests of business (e.g.,

The Individual Pension System in Turkey and in Europe

Retirement, without any question, is an important part for the life of people. People are in need of sustaining the standards of life that they had throughout their carreer. While social security systems, which had been established for the purpose of giving people a much more comfortable life. The creation of this system was able to meet the needs of Society and State, but at the end of the 20th Century, it started damaging the state and unable to meet the needs of people. This in turn, the main cause of a revolution in all over the world. One of these issues is because of the aging of the population, the decrease in numbers of young working people, and improper applications constituted the basis of the problems. To solve this problem, there were some reforms, but it did not foresee a remedy. Moreover, these regulations caused a loss of function of preserving the life standards for the retired people. Reform requirements for the social security system arose in order to increase the life standards for the retired people. Therefore, new social security systems have appeared in the world.

Features that influence the exit decision from the private pension system in Turkey

2013

In Turkey, the Private Pension System was given a head start in 2003. Although the system aims to provide supplementary income to the public pensions at retirement, observations reveal that many participants prefer to exit the system before retirement. The purpose of this study is to identify the characteristics of participants, who are more likely to exit earlier than retirement using the total population of contract buyers since the start of the system until 2011. The data is obtained from the Pension Monitor Center, and covers the customer and contract characteristics of more than 75% of all lapse types in the period. Impact of demographic factors and contract features are examined using the logit model. We divide the sample into different groups of customers according to their monthly contributions to the system. The results of econometric analysis reveal evidence of a significant relationship between exit decision and features such as education level, occupation, total accumulated savings, geographical regions, pension sales channel and payment instruments. Staying long enough in the system increases participants’ continuity. Our elaborations also provide some tips for pension companies to ensure longevity and retirement of customers.

The Pension Fund System in Turkey and Sweden

Studenckie Prace Prawnicze, Administratywistyczne i Ekonomiczne

Pension Funds are handy systems in every country because the life quality of older adults should be maintained in the right conditions. Retirees who have worked for years deserve to have a good quality of life during their retirement. Every country has its unique pension scheme and pension fund that taxes current workers in order to be able to pay retired people’s salaries. However, pension schemes are not perfect anywhere in the world. Some countries have a better system than others. That is why two countries (Turkey and Sweden) will be compared with each other in terms of their respective pension schemes. Firstly, each country’s pension scheme will be examined individually, and then they will be compared based on their positive and negative sides. This research paper aims to find an excellent example of a pension scheme or the best combination between countries.

THE IMPLICATIONS OF THE CONTRIBUTORY PENSION SCHEME ON PRIVATE DOMESTIC SAVINGS IN NIGERIA

The crisis with the non contributory pension plan gave rise to the adoption of the 2004 Pension Reform Act. This study investigated the implications of the contributory pension scheme on private domestic savings in Nigeria and the extent and magnitude on which the former has impacted on the latter. Ordinary Least Square (OLS) was employed for the empirical study. This analytical technique is suitable because it is efficient in term of output and adequacy of statistics generated. Time series data were used in the study and they were entirely secondary data which spanned from 1984-2014. The data was sourced from the Statistical Bulletin and the National Bureau of Statistics. The study checked the temporal properties of the variables in the model via unit root tests in order to determine the stationarity of the variables. The data were found stationary and co-integrated. The study revealed that 1% unit rise in pension fund contributed 5.7% to private domestic saving in the economy. The adjusted R-squared showed that 86% changes in private domestic savings were explained by pension funds, interest rate, disposable income and saving rate in the estimated model. The study recommended massive enlightenment for the scheme to the workers both in public and private sector, effective supervision and regulation of the scheme towards capital formation from saving for domestic investors. ___________________________________________________________________________ Keywords: Contributory Pensions Fund, Interest Rates, Disposable income and Saving Rate.

The Individual Pension System in Turkey: A Gendered Perspective

line with neo-liberal developments, private pension schemes have reached higher proportions in social security systems all over the world. However, it is a fact that disadvantages of women (i.e. lower level of wage, intermittent work life, and higher life expectancy) have negative consequences on private pension schemes in terms of retirement income compared with traditional pay-as-you-go systems. Turkey, in line with the current trend, introduced a privately managed individual pension scheme, the Individual Pension System in 2003. This study (conducted in 2008 -2009), using the actual data of 102,724 participants (sampled from a total of 1,457,704) provided by the Pension Monitoring Center, examines the effects of social variables (i.e. age, occupation, province, marital status, income, social security and education) on regular contributions of individuals to the system and analyzes the gender gap by using the generalized linear model. Özet Kadınların hem aile içinde hem de emek piyasasında değişen rolleri bu yüzyılda yeni bir sosyal politika oluşturmanın en önemli konulardan biridir. Neoliberal gelişmelerle birlikte özel emeklilik planları tüm dünyada sosyal güvenlik sistemleri içinde daha yüksek bir paya ulaştı. Ancak, kadınların dezavantajları (daha düşük ücret düzeyi, kesikli iş yaşamı ve daha uzun yaşam beklentisi vb.) geleneksel dağıtım sistemleri ile karşılaştırıldığında emeklilik geliri anlamında özel emeklilik sistemlerinde olumsuz sonuçlar doğurur. Türkiye bu mevcut trendle birlikte 2003 yılında özel sektör tarafından yönetilen emeklilik planı Bireysel Emeklilik Sistemini oluşturdu. Emeklilik Gözetim Merkezi'nin sağladığı toplam 1,457,704 kişiden örneklem olarak alınan 102,896 katılımcıya ait verileri kullanan ve 2008 -2009 döneminde gerçekleştirilen bu çalışma genelleştirilmiş lineer model kullanarak sosyal değişkenlerin (örneğin yaş, meslek, şehir, medeni durum, gelir, sosyal güvenlik kurumu ve eğitim gibi) bireylerin sisteme yaptıkları düzenli katkı payları üzerindeki etkilerini ve toplumsal cinsiyet eşitsizliğini incelemektedir.