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        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
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