Organized by CFA Society İstanbul in partnership with Willis Towers Watson, Undersecretariat of Treasury, Capital Markets Board, TKYD (Corporate Governance Association of Turkey), Bloomberg HT, TSPB (Turkish Capital Markets Association), Boğaziçi University ECONFIN, Boğaziçi University CARD and the Insurance Association of Turkey; the conference “Investors First for an Ideal Private Pension System” gathered professionals from public and private sectors.
The conference was organized at Boğaziçi University campus. During his opening speech Ertunç Tümen, President of CFA Society İstanbul, said: “As in the case of other private pension systems in the world that are based on defined contribution, level of retirement welfare for BES participants are directly linked to the results of their investment decisions within the pension system. Declining revenues from financial instruments and fluctuations in markets necessitate the improvement of existing products to protect pension investors and ensure that they reach retirement safely.”
Karasu: “We attach great importance to automatic participation”
Gökhan Karasu, Director General of Insurance at the Undersecretariat of Treasury, underlined that they preferred a proactive risk management method in public-private partnership model against risks likely to affect the public, individuals and the country, rather than claims management. Karasu added as follows: “Within this framework, individuals are entitled to additional financial rights other than transferred/social insurance in return for their own investments. In order to address the developing economy and differentiating individual demands at the same level, private pension system depends on the growth of its scale. Therefore, we attach great importance to automatic participation system to begin with. Public expects the private pension system that will also include automatic participation to offer more simplified investment options to individuals, to be less cluttered, to have a more consolidated fund composition, to comply with the risk profile and inform investors about investment options. Moreover, we believe that it is important to attract individuals in the system at earlier ages. We believe that it needs to become a system that provides long-term investments with the transformation from a savings model to a ‘savings and retirement’ model and therefore, a system that can transform the short term expectations.”
Kınık: “Retention period should be extended”
Tevfik Kınık, Executive Vice Chairman of the Capital Markets Board, summarized the foundation of private pension system and developments in the system following the enforcement of state subsidy system in 2013. Kınık stated that it is critical to extend the average duration of participants’ stay in the system; and listed the necessary factors to extend this duration as follows: maintaining current trust in the system, increasing the performance of pension funds, promoting encouragements to the public, and informing participants accurately all the time. Finally, Kınık added that Guideline for Pension Investment Funds was published with an amendment in March; and said that the Guideline brought life-cycle products to our country, defined the international standards for risk measurement and reporting mechanisms, and made it easier to access information regarding fund risks, performances and costs.
Urwin: “We are optimistic for the future”
Roger Urwin, Global Head of Investment at Willis Towers Watson, expressed during the conference that total pension assets in the world exceeded 38 trillion USD. Mentioning that 2.2 billion people currently participate in pension programs, Urwin said: “Domination of the negative sides of private pension model based on defined benefits accelerated the transition to pension model based on ‘defined contributions’ which stand out as the most applicable model. We believe that certain challenges of the system such as high costs, low-scale, low amount of contributions, and weak governance must be overcome.”
