Page 5 - Turkinsurance Digital Magazine

3

Auto-enrollment increases savings incrementally

Businesses with 10 to 49 employees will be joining Individual
Pension System via Auto-Enrollment as of July 2018. According
to the statistics announced by Pension Monitoring Center as of
6 June 2018, auto-enrollment will bring 4.5 million employees
from 231 thousand businesses into the BES system. BES ac-
cumulated 7 million participants between 2003 and 2017; and
reached 11 million participants thanks to the auto-enrollment
system, which has been effective for one and half years.

“Number of all participants in workplaces that will join the sys-
tem will be taken into account. However, we will continue includ-
ing employees who are younger than 45 years old,” said Insur- selected any funds. Employers are responsible from deducing the
ance Association of Turkey in a statement. Employees that have contribution amounts from employee salaries and transferring
joined the auto-enrollment system have so far saved 2.9 billion them to pension companies. Insurance Association of Turkey re-
TL for their futures. According to the statistics by Pension Mon- minded in a statement that workplaces joining the system accord-
itoring Center, 75 thousand workplaces have joined the system ing to the schedule should comply with their legal obligations,
since the initiation of Auto-Enrollment. 4 million employees in or would otherwise be subject to penalties. All workplaces and
auto-enrollment have saved 2.9 billion TL in funds. Insurance employers that will join the system are required to contract with a
Association of Turkey underlines that Auto-Enrollment System pension company and inform its employees about the new phase.
has a great significance in terms of contribution to total savings Auto enrollment offers interest-bearing and interest-free funds to
and adds: “Today, at the third step of auto-enrollment, Individual employees at the same time and under the same terms and condi-
Pension System (BES) has 11 million participants in total. With tions. 63 percent (1.8 billion TL) of 2.9 billion TL accumulated
the new phase that will begin as of July, 4.5 million more employ- in the system so far comes from interest-free funds and the re-
ees will start saving thanks to this application.”
maining 37 percent (1.1 billion TL) comes from interest-bearing
funds. Auto-enrollment provides 25 percent additional contribu-
Workplaces / employers should first choose a pension tion as state-subsidy for each contribution payment, and deposits
company to work with 1.000 TL to the pension accounts of employees who decide to
stay in the system, for once at the end of first two months. Fur-
Workplaces falling under the scope of auto-enrollment should thermore, if the participants who are entitled for retirement wish
first talk to a pension company and sign pension contracts on be- to receive their accumulations as pensions, the system rewards
half of their employees. They can notify pension companies about loyal participants, making 5 percent additional contribution for
fund selections according to the preferences of their employees or employees who prefer at least 10 years of annuity payments.
select the funds themselves on behalf of employees who have not

“DASK Disaster Management System” is in force as a reference for the rest of the world

In the 19th year of 17 August gean Region, Central Anatolian Region, Mediterranean Region,
Marmara Earthquake, which Black Sea Region, and Eastern Anatolian Region. Southeastern
shook Turkey at its core and Anatolian Region has the lowest rate.
caused a huge loss of life and
property; number of residenc- Turkey is a model country
es with compulsory earthquake Turkey is regarded as a model for other countries when it comes
insurance protection reached to catastrophic insurance pool models with the number of its pol-
8.6 million. Chairman of Turk- icies, insurance rates, size of its pool and technological infra-
ish Catastrophic Insurance structure. In recent years, many countries, particularly Pakistan,
Pool (DASK) announced that Iran, South Korea, Kazakhstan, Mongolia and Romania have
the Pool has paid 186 million considered the activities of TCIP as a model. Authorities from
TL for claims filed since its the pool have been explaining the Compulsory Earthquake Insur-
foundation. According to the ance and TCIP to organizations visiting from the United King-
statistics, Marmara Region is dom, Japan, Greece, Italy, Philippines, China, Mexico, Macedo-
by far the leader in terms of in- nia, Jordan, Albania, Indonesia, Romania, Kuwait, Azerbaijan,
Murat Kayacı surance rates; followed by Ae- and Kyrgyzstan.