Number of individual pensioners doubles in Turkey: Deputy PM Babacan

ANKARA – Reuters

Deputy Prime Minister Ali Babacan. DHA Photo

The participants of the Individual Pension System (BES) have increased up to 5.1 million as of January 2015 from 3.1 million at the beginning of 2013, when the state contribution at 25 percent started, said Deputy Prime Minister Ali Babacan Jan. 6.

Around 3.1 million had enrolled in the system since its starting year in 2003 until 2013, but we see a dramatic increase after the state contribution launched at the beginning of 2013, Babacan said.

The government has now contributed some 25 percent of the individual pension payments to each pensioner to encourage the system and increase savings across the country. The total volume of the pension funds has recently reached 37 billion Turkish Liras ($15.8 billion).

“We aim to reach 12 million individual pensioners by 2023,” said Babacan, at the introduction of the 5 millionth participant of the system.

“Turkey offers a fertile ground for the system to flourish with its young and dynamic population. We now enjoy demographic opportunities, but things may change in the next 10-20 years,” he noted.

The lower saving ratios create fragilities in the Turkish economy, but the saving ratio increased 1.5 percent in 2014 due to the latest measures, Babacan said.

“The lower the saving ratio is, the higher the current account gap is. Our economy needs long-term sources for more investments, production and growth. The BES makes great contributions here. Around 1,000 day-dues are in the system, which creates a significant source of saving,” he noted.

Turkey’s saving ratio decreased 12.6 percent in 2013, an all-time low level. The government aims at increasing the ratio to 15.1 percent in 2015, 16.2 percent in 2016 and 17.1 percent in 2017.

Babacan also said Turkey would most probably grow around 3 percent in 2014.

“This is one of the highest growth rates in Europe … Perhaps this rate is not satisfactory for us, but we think this is a good rate in the existing circumstances,” he added.