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Nascent Turkish pensions sector surges 40%

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TURKEY - Assets managed by Turkey’s nascent private pension system grew by more than 40% in 2009, higher than in any other OECD country.

Figures released by the state treasury Hazine Müsteşarlığı show the assets of the country’s 13 private pension companies increased by 42% last year to over TL9bn (€4.2bn).

The report forecast the rapid growth to continue in coming years, albeit at a gradually slowing rate, to the extent that total asset values would represent 10% of GDP by 2023, up from an estimated 1% today.

Turkey’s pension schemes have close to two million participants, more than a quarter of whom joined since 2008, five years after the country first introduced private pension arrangements.

Over half of the TL9bn contributions come from Marmara, the country’s northern-most region, which includes Istanbul and it’s 12.5 million inhabitants.

A distant second, with less than 20% of total contributions, is the region of Central Anatolia, home to the country’s capital and second most populous city, Ankara. The least uptake can be found in East Anatolia, where less than 1% of the working population contributes to the private schemes.

Uptake has been highest among the young, with almost three quarters of participants under the age of 35.

For regulatory reasons, over 50% of all funds are invested in government bonds and bills, while alternative investments, such as real estate, are not an option.

“Next we are interested in working on a lifestyle fund, as well as funds investing directly in precious metals and real estate. However, for now regulations do not permit these so we have opted for a wait-and-see policy,” said Gökhan Özüm, head of strategic planning at Garanti Pension.

For more on Turkish pensions see Pensions In The Mediterranean in the June issue of IPE.

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