Retirement help will not hurt budget: Babacan

ISTANBUL - Anatolia News Agency

Support in individual retirement will raise domestic savings, says Babacan. AA photo

The government contribution to the individual retirement system is not large enough to cause a disruption in the budget balance, Deputy Prime Minister Ali Babacan said yesterday, as he was leaving for the U.S. to attend World Bank and International Monetary Fund meetings. He will then attend G-20 economy and trade ministers’ meeting in Mexico.

The total amount of government contribution to the individual retirement system is not certain, as it will be based upon the amount of money citizens will deposit in it. The government will contribute 25 percent of the amount an individual deposits in the pension system. This government contribution will be deposited in a separate account.

The system will increase total domestic savings, Babacan said, adding that one lira of government spending on the individual retirement system would result in four liras of savings.

“Budget discipline is a tool in the fight against the current account deficit. If we increase savings 4 lira by spending 1 lira from the budget, and thus decrease the current account deficit, it is something that should have already been done,” Babacan said.