Social reform to boost savings, AvivaSA says
Posted by meb at April 23rd, 2008
The expected social security reform is likely to boost private savings for retirement in Turkey, the managing director of AvivaSA told reporters in Istanbul yesterday. “The reform and the increase of retirement age to 65 from the current 58 years will make people plan their future more,” Meral Egemen said.
The private pension system in Turkey consists of 10 firms and 1.54 million scheme members at present. The system had a total asset volume of YTL 4.92 million (2.35 billion euros) in mid-April. Currently, 75 percent of all contracts are individual pension plans and 25 percent group plans.
Institutional growth:
AvivaSA extimates the total number of scheme members in Turkey’s private pension system to reach two million and the total assets to increase to YTL 7 billion in 2008.
The recently introduced vesting period will also support the development of the private pension system, added Egemen. “The vesting right is likely to lead to growth in the number of group clients in the future,” she said.
The number of [new] institutional clients at AvivaSA reached 6,000 between January and March, many of these being multinational companies, Egemen added. In mid-April AvivaSA’s funds have total assets of YTL 1.18 billion (566 million euros) managed by Ak Portolio Management. The firm’s goal is to increase its assets to YTL 1.5 billion and the share of company pension plans to 30 percent of business in 2008.
Private savings limited:
Private pension funds still form a minor share of the gross domestic product (GDP) in Turkey, noted Egemen. “Pension funds make some 1 percent of Turkey’s GDP which is a minor figure in comparison with the Netherlands or Switzerland. [….] Some 10 years ago Spain was in a similar situation, pension funds making only 3-4 percent of its GDP. Spain’s example shows the direction, which development can take in Turkey,” she said.
Pension funds make some 130 percent of the GDP in the Netherlands and some 122.1 percent in Switzerland at present. In Spain the ratio stands at 7.6 percent, according to the Organization for Economic Co-Operation and Development (OECD).
source: Turkish Daily News
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