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Participation of under-18-year-olds in the Private Pension System in Turkey: A Growth Estimation

Author

Listed:
  • Hasan Meral

    (Marmara University, Institute of Islamic Economics and Finance, Istanbul, Turkey)

  • Ismail Dilek

    (Galen College of Nursing, Curriculum and Instruction, Louisville, USA)

Abstract

While the private pension system in Turkey reached 14.5 million participants and 433.4 billion TL ($26.2 bn) assets by the end of 2022, the ratio of assets to GDP is only around 3%. The main reasons for the low asset/GDP ratio are the limited contributions and the low average seniority of contract. In 2021, Turkey implemented a regulation that allowed the participation of under-18-year-olds in private pension plans. The main purpose of the regulation was to increase the coverage rate of the system and to get people to save for longer. Although the regulation enabled the number of participants to increase in the short term, its longterm effects on private pension assets are uncertain. The aim of the study is to measure the effect of the participation of under-18-year-olds onprivate pension assets in Turkey. The univariate time series method was used to predict the growth of the private pension system in Turkey for the next ten years. The prediction relied on the data of the private pension system’s asset size, annual net annual contribution, growth rate, and rate of return between 2003 and 2021 in Turkey. The results showed that by the end of 10 years, the assets of under-18-year-olds would account for 7% of the total private pension assets and that 22% of the annual contribution would be paid by under-18-year-olds.

Suggested Citation

  • Hasan Meral & Ismail Dilek, 2023. "Participation of under-18-year-olds in the Private Pension System in Turkey: A Growth Estimation," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 10(2), pages 395-407, July.
    • Handle: RePEc:ist:iujepr:v:10:y:2023:i:2:p:395-407
    DOI: 10.26650/JEPR1167579
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    More about this item

    Keywords

    Private pension in Turkey; under-18-year-olds private pension; pension asset forecast; univariate time series JEL Classification : J32 ; J26 ; E27;
    All these keywords.

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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