Mr. Recep Tayyip Erdoğan’s statements at the Economic Reforms Promotion Meeting regarding the Private Pension System (PPS) caused great excitement in the insurance and private pension sector. The President of the Türkiye Sigorta Atilla Benli quoted the following: ” With PPS, we secure the future of our 23 million young population under the age of 18.”
The statements of Recep Tayyip Erdogan regarding the insurance sector welcomed by the member organizations of Türkiye Sigorta. With the new application, the path is getting cleared for 23 million young people under the age of 18 to benefit from PPS, and significant support is provided with a 25 percent state contribution.
PPS will serve as a money-box
Atilla Benli expressed his feelings about the relevant issue; We work intensively with all our stakeholders on the necessary preparations. We welcomed the statements of Recep Tayyip Erdoğan in this direction with excitement. PPS will serve as a money-box for our children. Likewise, with the inclusion of the savings in our foundations and funds into the system, the integration of assurances of unique nature such as education, health, and life insurance. The scope of the PPS has also expanded. Along with that, PPS will continue to contribute to the advancement of our capital markets and will resolutely continue to maintain its role as a national security shield against financial fluctuations.”
Within the scope of economic reforms, pension savings in foundations, funds, associations, etc. Other than PPS will be allowed to be transferred to PPS until the end of 2023. The amount to be transferred is expected to be 10 billion Turkish Liras in the first place, and the total potential is expected to reach 50 billion Turkish Liras.
Foul-weather friend
With the expansion of the scope of the PPS, participants will be able to use their savings when deemed necessary other than retirement periods. In this context, PPS will be allowed to seize every inch of the life cycle while maintaining its “foul-weather friend” identity.
Fund size potential of 100 billion Turkish Liras
Atilla Benli continued his words as follows; ”We consider the announced reform package as a crucial contribution to the efforts of our private pension sector to ensure economic and social sustainability. Culture and value aspects will also be noting. Efforts on raising the awareness of ‘saving’ on young generations will gain further momentum.”
The PPS is also expected to reach a fund size potential of 100 billion Turkish Liras in the medium term with transfers from foundations and funds.
A significant increase
Compared to the previous year in the total net asset value of the fund there was a significant increase in the private pension system and automatic enrolment in 2020 equivalent to an approximate ratio of 28%. This also indicates the trust in the system during the Covid-19 pandemic. The total number of participants enrolled in PPS and automatic enrolment exceeded 12.6 million. The total fund size, including the state subsidy, reached nearly 171 billion Turkish Liras according to the data of the Pension Monitoring Center on March 05, 2021.
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