Individual pension system serves to future of Turkey through today’s savings

 
 

Within the scope of Turkish Capital Markets Summit, Insurance Association of Turkey (TSB) organized a panel named “In What Ways Would Private Pensions Serve Better for the Future of Turkey?”

 

Moderated by Cem Kılıç, a lecturer, commentator and columnist; the panel was participated by Burak Ali Göçer, Chief Executive Officer of Garanti Pension and Life I.C. and Vice President of the Executive Board at Insurance Association of Turkey; Taylan Türkölmez, General Manager and Chairman of the Executive Board at Allianz Life and Pension; and Tevfik Eraslan, CEO of İş Asset Management and Board Member of Turkish Capital Markets Association (TSPB).

 

Turkish population is getting older fast

 

Taylan Türkölmez, General Manager of Allianz Life and Pension and Chairman of the Board at Pension Monitoring Center (EGM), stated that average life expectancy increased in Turkey; underlining that people should start saving today for their retirement period, which has already been prolonged as a result of the aging population. Türkölmez also mentioned the population projection research which was prepared by TÜİK: “Today, average age of the population is 32, which is expected to increase up to 43 by 2070. Ratio of old population over 65 currently stands at 8.5 percent compared to overall population. It is estimated to reach 23 percent by 2070. Right now, we take pride in having a young population. However, we are face to face with a 50-year term where the rate of old population will increase, young population will decrease and average life expectancy will be extended.”

 

Türkölmez: “Auto-enrollment is supplemental to Social Security”

 

Reminding that the society should be ready for this rapidly changing demographic structure, Türkölmez said developed countries had been saving since 1900s for their retirement periods. He stated that the savings accumulated in the pension funds of OECD countries equaled to 50 percent of their GDPs on average, but was only 2.6 percent for Turkey. Underlining that auto-enrollment is the right system for Turkey, Türkölmez said employer contribution was a vital part of secondary pension plans all around the world. He added that the system should be embraced by all employers and all stakeholders including syndicates, in order for the auto-enrollment system to reach the desired participation levels: “Employer contribution should be a part of the system, if we want to carry auto-enrolment to higher levels.”

 

Göçer: “Participants should monitor the performance of pension funds”

 

Burak Ali Göçer, Chief Executive Officer of Garanti Pension and Life I.C. and Vice President of the Executive Board at Insurance Association of Turkey, stated that individual pension system was perfectly suited for savings and a comfortable retirement period. He defined individual pension as a highly attractive system with 25 percent state support. Stating that people can save even with small amounts of money in the the system; Göçer said those savings are invested by professional asset managers, but participants were also responsible from the returns of their own savings. Therefore, according to Göçer, it is of vital importance for participants to monitor the performance of funds where their savings are invested.  He added as follows: “Pension fund returns are really very valuable. If you look into your total savings, you can see that two thirds of your total savings come from investment returns. You can switch your pension funds 6 times a year. Unfortunately, share of participants who benefit from this advantage is only 5 percent.”  

 

Underlining that it is important to enter in the system at young ages, as the accumulated savings increase in parallel with the time in the system, Göçer said: “The earlier you enter in the individual pension system, the better. That’s why, we want to bring citizens under 18 years old into the system as well.”

 

 

 

 
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