Page 12 - Turkinsurance Digital Magazine

12 at a glance

The Insurance Association of Turkey: “Pension plans (BES) continue to grow”

The Insurance Association of Turkey has made a statement
regarding some misleading news about BES. The statement
emphasized that BES, which is critical not only for individuals
to maintain their savings and living standards in retirement but
also for the country’s economy, continues to experience positive
growth. The umbrella organization of the insurance sector,
the Insurance Association of Turkey (TSB), made important
statements about the Individual Pension System (BES), which
has become the “center of savings” with the comprehensive
structure achieved through the regulations in recent years. TSB,
which drew attention to misleading news based on incorrect
information about BES in some media outlets in recent days, at the end of 2022, the possibility of receiving ‘government
emphasized that BES continues to grow positively and BES contribution’ for contributions paid above the annual limit in
funds earn above inflation in the long term.
the following years has been introduced. Thus, a participant
can receive the corresponding ‘government contribution’ for the
TSB, pointing out that the statistics published in the news in total amount deposited in a lump sum, instead of dividing and
question do not match official data and are misleading about deferring the desired contribution payment over the years, and
the system, stated that contrary to the claims, BES entries then deposit the remaining contribution payment on the first
have increased compared to previous years, while exits have day of the next calendar year within the limit of the subsequent
decreased. According to data from the Pension Monitoring calendar year, and carry forward any remaining contribution
Center, the number of new participants entering BES reached payment that exceeds the limit to future years, if any. In this
460,044 in the first quarter of 2023, while the number of way, participants have the opportunity to invest the entire
exits from BES, including compulsory reasons such as death, contribution payment in funds from the beginning, instead of
disability, and retirement, remained limited to 264,793. When keeping a portion of the contribution payment for deposit in
the last 5 years of changes in BES are examined, it is seen that future years. In BES, which offers funds suitable for all types of
BES continued its stable growth, especially with the entry of risk profiles, short-term investment preferences may be affected
participants under the age of 18 into the system, which started by economic fluctuations, but significant gains can be achieved
in June 2021.
through long-term funds. TSB emphasized in its statement
that choices suitable for the long-term structure of the system
TSB also emphasized that the average returns of BES funds protect participants and significantly increase their savings.
have outperformed many alternative investment instruments in The statement includes the following information:
recent years, particularly with the government’s contribution
rate increasing to 30%, which further increased trust in the “BES fulfills an important role in instilling long-term savings
system. The statement noted that, as a result of all these habits in individuals and increasing national savings, while
factors, the exit rates that were seen in the early years of the ensuring that the interests of our participants are protected and
system have rapidly decreased. BES, which has been expanding their returns are maximized with the support of all stakeholders.
regularly since its establishment in 2003, has reached nearly 15 When we look at past long-term returns, we see that the average
million participants today, including employees in the Automatic return of BES and OKS funds in the 5-year period (252%) has
Enrollment System (OKS). The compound annual growth rate provided a return above the CPI (%208).”
in BES and OKS between 2013 and 2022 was 37%.

In the statement emphasizing the contribution of increasing
The misleading news in question also includes the phrase the ‘government contribution’ to 30% and the provision of
“100% of the contribution can be taken in retirement”. government contribution for bulk contributions to be given
The word “contribution” refers to the contributions paid by year by year in order to spread the system widely in 2022 and
the participant, and in the current system, BES participants contribute to the sustainable growth of BES, it was stated that
can already terminate their contracts and withdraw their the practices of including employees over the age of 45 in OKS,
entire savings from the system whenever they wish. The 30% allowing partial withdrawals and assignment of accumulations,
“government contribution,” which is unique in the world and issuing gift certificates contribute greatly to making the
and one of the most significant attractions of BES, can be system a more comprehensive structure and making savings the
withdrawn entirely in retirement, as well as in the event of center of attention.
death or disability. Furthermore, with the amendment made