Insurance Association of Turkey (TSB) organized a panel called ‘100 is the New 60’ within the scope of Turkish Capital Markets Summit 2019. Moderated by the Journalist and Writer Noyan Doğan; the panel hosted Mustafa Akmaz, CEO and Board Member of Pension Monitoring Center, Olgun Küntay, President and Member of the Executive Committee of AXA Hayat ve Emeklilik, M. Selim Yazıcı, CEO and Chairman of TEB Asset Management, and Uluç İçöz, Director at USHAŞ International Health Services as panelists.

The panel concentrated on Individual Pension System (BES) and Auto-Enrollment (OKS) with discussions on the extension of life expectancy, silver economy, demographic transformation and its impacts on insurance market, reforms in BES and OKS, impacts of reforms on pension funds, and Complementary Pension System.

 “Social security system should be supported with private pension system and other systems that will increase savings”

Olgun Küntay, President and Executive Committee Member of AXA Hayat ve Emeklilik, underlined that average life expectancy increased:“ People over 60 currently accounts for 12 percent of the population, but it will go up to 22 percent by 2050. With regard to this demographic change, social security system also needs to be reformed. Social security system should be supported with private pension system and other systems that will increase savings.”

Adding that BES and individual savings are addressed under different titles in the 2020 Annual Program of the Presidency, Küntay added: “Especially Complementary Pension System is of vital importance. Initiation of this system will mean that 2nd step pension system is implemented in Turkey in its fullest form.”

Social security system needs to be prepared for the future

Mustafa Akmaz, CEO and Board Member at Pension Monitoring Center, stated that questions of the quality of life were also raised with the increasing average life expectancy; adding that those demographic changes also transform the saving and consumption habits. Underlining that retirement age of 51 in Turkey is below the average of OECD countries, he added: “Turkey is getting old, but our social security system is not ready for this. Considering the pace of population growth and increase in the average life expectancy, sustainability of our social security system will be subject to new discussions in the coming term. Yet, it is still possible to build a sustainable system that can be successful on a global scale if we can utilize our country’s potential accurately.”

'There are no unprofitable funds, but you need to make the right investment decisions'
M. Selim Yazıcı, CEO and Chairman of TEB Asset Management who stated that social security provided by one’s family is regarded as a significant support in Turkey, but added that family support was no-longer enough for a person considering that average life expectancy was getting closer to 100 and that we needed a sustainable economy and social security system. “Non-existence of 2nd and 3rd step pension systems means both lower income and life standards, as well as longer working periods and late retirement,” he said.

Underlining that active management requirement for pension funds will increase even further in the future, Yazıcı said, “Pension funds in our country are managed successfully and bring a return which is approximately 6 points higher than the inflation rate. There are also funds with lower returns, but financial consultancy is important at that point. Therefore, there are no 0-profit funds; but accurate investment decisions need to be made.  We may consider obligating licenses for people wishing to work in this area. Selling funds at different prices for corporate customers, individual customers and short-term investors may also increase the efficiency of fund management. We might expand the market with more effective fund management and higher quality labor-force required to achieve it.”

Increasing elderly care costs create opportunities for Turkish insurance market
Uluç İçöz, Director at USHAŞ International Health Services, stated that in 30 to 40 years, Turkey is expected to reach the ageing level that Europe reached in about 100 to 120 years; underlining the importance of taking precautions starting from today: “The world spends 1 trillion USD for elderly care every year; most of which is spent by developed countries where 20 percent of the elderly population reside. However, share of elderly care costs in GDP is expected to increase by 3.7 to 7.6 points in the coming term. This is a serious cost for all countries.”

Underlining that Turkey has significant advantages in terms of health tourism thanks to its location and competence, İçöz added as follows: “Raise in elderly care costs means that treatments shift from expensive countries towards cheaper countries. Short and long-term products to be developed for those who will visit our country for health tourism create opportunities that will increase the profitability and fund size of Turkish insurance market. Demographic transformation should be thought as a package that includes retirement, long-term care and health for both our country and the rest of the world.”

At the end of the panel, M. Akif Eroğlu, Secretary General of TSB, presented all the panelists with certificates of trees planted by TSB with the aim of improving forestry and greenery in our country. After that, they posed for a memorial photo-shoot all together.