A Review of the Private Pension System and the Current Situation in Türkiye
Abdüsselam SağınThis study examines the central role of saving at the individual and societal levels, underscoring its importance for capital accumulation and domestic investment, particularly in developing countries. This study examines the individual benefits of the Private Pension System in terms of providing income security in retirement, smoothing consumption, and increasing the incentive to save through tax benefits. The Private Pension System serves to strengthen long-term saving habits and thus financial discipline among individuals. From a societal perspective, the Private Pension System plays a key role in capital accumulation in Türkiye, promoting the deepening of capital markets and reducing the burden on the social security system. It is also important to note that the PPS provides a crucial safety net for societies with aging populations. Evidence suggests that a reliable source of income has a positive impact on the mental well-being of older people, leading to greater life satisfaction and social participation. PPS contributes to a dignified and satisfying life for the elderly, increasing both financial security and social harmony. With these features, PPS plays an important role in the adaptation of societies to demographic changes and offers sustainable solutions for the future elderly population.
Bireysel Emeklilik Sistemi ve Türkiye’deki Mevcut Duruma Dair Bir İnceleme
Abdüsselam SağınBu çalışma, tasarrufun bireysel ve toplumsal düzeydeki kritik etkilerini analiz ederek özellikle gelişmekte olan ekonomilerdeki sermaye birikiminin ve yurtiçi yatırımların finansmanı için önemini vurgular. Finans piyasasının gelişmesi ile çeşitlenen finansal araçlar, bireylerin tasarruf yapabilme imkanını arttırmaktadır. Bireysel Emeklilik Sistemi (BES) de Türkiye’de son yıllarda önemli bir yatırım aracı olarak finans piyasalarda öne çıkmaktadır. Çalışma, BES’in bireysel faydalarını, emeklilik döneminde gelir güvenliği sağlaması, tüketim düzleştirmesi yapma olanağı sunması ve vergi avantajları ile tasarruf motivasyonunu güçlendirmesi açısından ele alır. BES, bireylerin finansal disiplinini geliştirerek uzun vadeli tasarruf alışkanlıklarını pekiştirir. Toplumsal düzeyde ise BES, Türkiye’de sermaye birikimini destekler, sermaye piyasalarının derinleşmesine katkıda bulunur ve sosyal güvenlik sistemi üzerindeki yükü azaltır. BES’in, yaşlanan nüfus yapısına sahip toplumlar için özellikle önemli bir güvenlik ağı sunduğu da belirtilmelidir. Yaşlı bireylerin emeklilik döneminde yaşam kalitesini sürdürmelerine destek olan bu sistem, kamu emeklilik sistemlerine duyulan ihtiyacı azaltarak bireylerin ek gelir elde etmesine de olanak sağlar. Araştırmalar, güvenilir bir gelir kaynağına sahip olmanın yaşlılar arasında kaygıyı azalttığını, yaşam memnuniyetini artırdığını ve sosyal katılımı desteklediğini ortaya koymaktadır. BES, yaşlı bireylerin onurlu ve tatmin edici bir yaşam sürebilmesine katkı sağlayarak hem finansal güvenliği hem de sosyal uyumu artırır. Bu özellikleriyle BES, toplumların demografik değişimlere uyum sağlamasında önemli bir rol oynar ve gelecekteki yaşlı nüfusa yönelik sürdürülebilir çözümler sunar.
The concept of savings plays a central role in capital accumulation, especially in developing countries where financing investments domestically is essential. The presence of a robust financial system can have a significant impact on individuals’ ability to save and is further enhanced by having a variety of financial instruments that are available. In recent years, the Private pension system (PPS) has emerged as an important savings tool within the Turkish financial ecosystem, benefiting both individuals and the broader economy. This study aims to explore the characteristics and importance of the PPS in Türkiye by examining its impact at the personal and societal levels and its integration into the Turkish economic landscape.
Theoretical Framework
Since the industrialization era, the combined effects of rising retirement ages, declining public pension support, and an aging population have led developed countries to increasingly rely on private pension funds. In response, individuals have sought ways to bridge potential consumption gaps during retirement. PPS allows individuals to save a portion of their earnings in their active working years and to invest these savings in long-term instruments in order to support a stable standard of living during retirement. In addition to promoting personal financial security, PPS also benefits economies by increasing long-term capital reserves. This study draws on theories such as the life-cycle hypothesis to understand how the PPS enables consumption smoothing, allowing individuals to balance spending throughout their life.
Historical Development of the Private pension system
The first recorded introduction of an individual pension scheme was done by the American Express Company in 1875 and was later extended to both the public and private sectors. However, structural adjustments were required due to issues such as partial or no payments to retirees during certain periods, leading to significant pension reforms in the United States under President Ford in 1974. Similarly, European countries such as the United Kingdom and Switzerland gradually evolved their systems to include broader categories of workers and improved pension protection. In Türkiye, the Private pension system (PPS) was officially introduced in 2001 with the enactment of Law No. 4632 and became operational in 2003. Supported by the government, Türkiye’s PPS is a voluntary system that complements the state social security structure to provide additional retirement income.
Structural Dynamics of Türkiye’s PPS
In Türkiye, workers who participate in the PPS make periodic contributions that are managed by professional pension funds. Each participant can select a portfolio based on personal risk preferences with an aim for long-term returns. The Turkish government introduced a 25% state contribution in 2013, significantly boosting system participation. However, recent economic volatility has hindered this growth, leading to an increase in withdrawals from the system. Despite these challenges, the PPS remains a crucial mechanism for economic stability by providing individuals with an alternative savings avenue and supporting the financial market’s liquidity.
Impact of the PPS on Individual and Societal Savings
At the individual level, the PPS offers several benefits such as income security in retirement and stable consumption levels, where savings accumulated during active working years help maintain living standards in retirement. In addition, the PPS provides tax benefits that incentivize saving and contribute to financial security and literacy. The system promotes financial discipline by encouraging individuals to plan their budgets more responsibly. At the societal level, the PPS has a positive impact on economic growth by encouraging capital accumulation, increasing overall savings rates, and promoting the development of capital markets.
PPS’s Contribution to Economic Stability and the Social Security System
One of the PPS’s most important contributions is how it supports Türkiye’s social security system, a system that is under increasing pressure from an aging population. By reducing reliance on public pensions, the PPS eases the burden on the social security system. The PPS also contributes to financial security throughout society by reducing the risk of poverty in old age and increasing financial independence. Tax incentives and financial inclusion initiatives within the PPS help bridge income gaps, promote a more equitable distribution of income, and support overall social welfare.
Conclusion and Evaluation
The PPS offers broad benefits at both the individual and societal levels. By encouraging long-term savings, it provides economic security for individuals in retirement while benefiting the Turkish economy through increased capital reserves and market stability. Although challenges remain due to economic fluctuations, the PPS continues to play an essential role in Türkiye’s socioeconomic landscape by contributing to financial literacy, economic resilience, and social cohesion. Ultimately, the PPS is a multidimensional system that promotes sustainable development by supporting the financial security of individuals and the economic and social well-being of the nation.
