Page 20 - Turkinsurance Digital Magazine

20 cover story

Dr. David Knox, Mercer’s Senior Partner and the lead au- household and public debt ratio, demographic structure,
thor of the study, stated that it is imperative that partic- State Contribution incentive, transparent, reliable and ef-
ipants in the pension industry take immediate action and fective management of the Private Pension System were
said: “The governments of many countries around the world identified as strong areas. The report contained recommen-
have responded to COVID-19 with large-scale economic in- dations on improving the minimum and needy pension level
centives that have been added to government debt and re- for Turkey, preventing early access to private pension sav-
duced the opportunity for governments to support their el- ings and making it mandatory to receive a certain part of
derly populations. Global pension plans are shifting away the private pension savings as a monthly salary during the
from traditional defined benefit plans towards plans that retirement period.
target savings. Despite the difficulties, it’s time to actu-
ally accelerate pension reform, not to curb it. Individuals It’s time to accelerate, not curb, pension
are increasingly forced to take responsibility for their own reform
retirement income, and they need strong regulations and
management to be supported and protected.” Serap Özalp Arslanargin, Mercer Turkey Private Pension
Consulting and Broking Leader, pointed out that the pan-
Dr. David Knox highlighted that Although there are signif- demic has exacerbated socio-economic inequality in many
icant differences in the level of retirement income between parts of the world and said: “From a long-term investment
the genders, the difference in retirement income between perspective, we are talking about an extremely difficult
the genders cannot be explained by a single reason and environment in which historically low interest rates and,
said: “The reasons for the gender retirement income gap in some cases, negative yields clearly affect profitability.
are mixed and varied. The pension design and socio-cultural Complicating the issue even more, the difference in pen-
problems related to employment in each country and region sion income between the genders, the fact that women spend
cause women to be much more disadvantaged than men in their retirement periods decently, which has even fewer
terms of retirement income. We know that closing the gen- rights, also brings additional difficulties. For the first time
der retirement gap is a huge challenge, given the close link this year, the report examined the impact of the gender gap
between retirement and employment and income patterns. on retirement income. According to the research, there is a
However, given that poverty among the elderly is more com- gender difference in every retirement income system in the
mon among women, we cannot afford to be indifferent to world. In general, the main reasons for the gender-related
it. There are a number of measures that the pension indus- retirement income gap are defined as employment, retire-
try can take. To begin with, in order for individuals to be ment income design and socio-cultural situations. The re-
included in pension systems, restrictions on the eligibility port draws attention to what needs to be done to improve
requirement for employment must be removed. Regardless women’s retirement incomes around the world and advises
of how much you earn, how hard you work, or how long employers, system regulators and governments. With these
you have been working, every individual should have the concerns, delivering a secure retirement promise depends
opportunity to participate in a pension plan that provides on policymakers and industry stakeholders taking collective
adequate benefits.” action to examine the strengths and weaknesses of pension
systems to deliver better retirement benefits for every indi-
Turkey has development areas vidual.”

Compared to the previous year, Turkey increased its score The Global Pension Index is a comprehensive study of the
by 3 points with the improvement in the minimum pension global pension systems that make up two-thirds (65 per-
th
and some other criteria and ranked 39 in the general rank- cent) of the world’s population. It compares pension income
th
ing with 45.8 percent, 35 in the “Qualification Sub-In- systems around the world, highlighting some shortcomings
th
dex” and 38 in the “Sustainability Sub-Index” with 28.6 in each system, and suggests possible areas of reform that
percent, and ranked 30th in the ‘Integrity Sub-Index’ with will provide more adequate and sustainable pension bene-
66.7 percent. According to the results of the research, fits. The top three systems, all of which receive an A grade,
while there are areas of development of Turkey especially are sustainable and well-managed systems that provide
in terms of sustainability, high net substitution rate, low strong benefits to individuals.