Some 500,000 contributors are expected to join Turkey’s private pension system this year as a result of government incentives, boosting its overall worth to 30 billion lira ($17 billion), the head of the Pension Monitoring Centre (EGM) said on Wednesday.
The system had 3.1 million contributors and a fund size of around 20 billion lira as of December.
Under new regulations which went into effect on Jan. 1, the state will make a 25 percent contribution to private pension premium payments while fund management charges will also be reduced as the government seeks to boost savings levels.
Savings fell to 12 percent of national output in 2010 from around 17 percent in 2002-2008, according to World Bank data. That compares with around 23 percent in the 1990s.
“By the end of 2013 we expect 500,000 people to enter the system as new contributors, with the fund size of the personal pension system expected to reach 30 billion lira,” said Mehmet Bostan, chairman of the EGM which was set up by Turkey to oversee the private pension system.
Deputy Prime Minister Ali Babacan told the same news conference the state had set aside 1.25 billion lira in funding for the pension system and further transfers could be made if the need arose.
Turkey’s private pension law was approved by parliament in 2001 in what was seen as a major step to reduce the burden on state social security and improving welfare levels.
The pension system went into effect in October 2003, with six pension companies involved. There are now a total of 17 pension companies in the system. ($1 = 1.7838 Turkish liras)