TURKEY - Anadolu Hayat Emeklilik, the second-largest pension insurance firm in Turkey in terms of assets under management, could pioneer diversification of the country's pension fund range by introducing a new interest-free investment vehicle which follows the principles of 'Sukuk', IPE has learned.
Anadolu's fund range is currently made up of 17 different funds managed by Is Bank, HSBC and TEB. Three of these are invested inequities, four in bonds and the remaining ten in mixed assets.
However, it is in the early stages of considering the launch of a Sukuk offering - securities that comply with the investment principles of Islam, and are prohibited from the charging or paying of interest.
The new product, if launched, has the potential to bring a new means of diversification to the Turkish pensions scene, as funds have traditionally tended to offer a relatively limited set of saving options, consisting mainly of treasury and euro bonds, and equities.
Since the global finance crisis set in, the Turkish pensions market has
been discussing alternative investments ranging from gold and property funds to sukuk, in order to find ways to protect their assets from market
Uğur Erkan, assistant general manager at the TRL1.74bn (€820m) fund, confirmed the group is determined to develop its product range, but noted despite the recent turbulence Anadolu's funds are still yielding healthy returns the funds yielded a 15.5% return in the first seven months of 2009.
Erkan believes new legislation, which came into force in August 2008 and allows foundations to transfer their members' pension assets to the private pension system, will lead to major growth.
There are some 250 pension foundations and associations in Turkey with pension commitments, managing total assets of around €6bn.
"But this will take some four years to happen. Because many foundations are still operating under defined benefit structures and private firms under defined contribution, the transfer will not be easy," he said.
"Private pension assets, totalling TRL8bn, do not currently make even one per cent point of Turkey's national income of TRL950bn. This means the system is still in its infancy," Erkan added, noting the market is likely to reach an asset volume of TRL9bn and 2m savers by the end of 2009.
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