TURKEY - Turkey's president Ahmet Necdet Sezer has approved a law which is expected to lead to a growth of the country's private pensions sector.
The law, published yesterday on Turkey's Official Gazette, supports the harmonisation of Turkish laws with the European Union in the field of private pensions.
The main purpose of this law is to create a legal framework for the establishment of occupation pension plan system launched in October 2003 which should ensure every Turkish employer has voluntary access to an occupational pension scheme.
The newly-approved law is considered a notable step towards the construction of a comprehensive occupational pension system in Turkey, following the EU directive on occupational retirement provision.
More specifically, this law grants the members of second-pillar voluntary schemes vesting rights, for which the local pensions industry has been impatiently waiting for the past two years.
It also contains a proposal to remove key quantitative limits on private pension investments such as the current 15% cap on foreign assets, and the 30% minimum limit on Turkish government bonds.
Gökhan Erun, executive vice-president of Garanti Bank, who previously acted as the managing director of Garanti Pensions, pointed out the industry waited for the implementation of vesting rights for several years so the Turkish pensions industry warmly welcomes its approval.
"Until today, pension companies in Turkey have made mutual agreements with their clients on vesting periods, but they have not been exactly binding," he noted.
"The new law is likely to lead to notable growth of the second pillar and occupational plans which, so far, due to the lack of vesting rights, have remained small," he said.
At present collective pension plans make only 25% of all contracts in Turkey.