New pension system raises applications, report says

ISTANBUL

The private pension’s volume increased by 4.5 folders in two months.

Turkey’s new private pension system, which assures a 25 percent state contribution, has lead to a rise in the number of applications by 200,000 in the first two months of this year, from the same period a year earlier, according to a report released by Ernst&Young.

The private pension system’s volume increased by 4.5 folders in January and February from a year earlier as more than 200,000 new participants entered into the system, the report said, noting that the total number of the participants reached 3,057,301.

According to the private pension scheme, the government will pay 25 percent of the pension to participants every month as a state contribution, as it has set aside 1.25 billion Turkish Liras to support the private pension system in the 2013 budget.

The new system has enhanced the marketing strategies of insurance companies, said Seda Hacıoğlu, partner at Ernst&Young Turkey. “The fund value of participants reached 19.68 billion liras as the amount used for investments rose to 15.55 billion liras,” she said.

Hacıoğlu pointed out that 74,000 new participants between 18 and 34 ages made 42 percent of the total number of new participants.

The report also anticipates that the investors from Europe and Asia, whose consumption has slowed down, will turn toward Turkey which has a young population, qualified labor force and new regulations.