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Turkish insurer to unveil pensions offering in H2

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  • Turkish insurer to unveil pensions offering in H2

TURKEY - Deniz Emeklilik ve Hayat, the life insurance and private pensions operation of Turkey's Denizbank, is planning to enter the Turkish pensions market and launch is set for July this year.

Deniz Yurtseven, general manager of Deniz Emeklilik, said the company is in the process of finalising authorisation procedures.

"We gained a license to operate a pension company in September 2008 and now need to get approval for the seven pension investment funds we will offer," said Yurtseven.

Turkey's private pension system, established in 2003, is currently made up of 12 companies managing 121 funds with assets totalling €3bn.

Approximately 71.3% of the assets currently in the market are invested in bonds, while 7.5% are held in equities, 16.1% in reverse repos, and 5.1% in other asset classes.

Deniz Emeklilik's funds will be invested in a variety of asset classes including equities, currency and bonds, said Yurtseven.

"We prefer to enter the market with a quite plain product offering, which is also the case in other Turkish pension firms. But in five years time the market will perhaps also see the evolution of sector equity funds, such as technology funds, for example. For now, more traditional asset classes like bonds and currency make the lion's share of pension portfolios," he said.

Approximately 1.76 million of Turkey's 70.5 million strong population currently contributes to private pension funds and the majority (82%) of pension plans in Turkey are private contracts.

The finance crisis has reduced the share of corporate contracts from 25% last March to 18% at present, which means any move towards the creation of a pensions second pillar is likely to take place even later than envisioned, suggested Yurtseven.

"The crisis is making pension insurances offered by the employer additional luxury," he said.

"Many  multiethnic corporations, which usually offer subsidised pension plans to their employees, are no longer doing so. When companies are cutting their costs and unemployment is increasing most employees are happy to simply have a job," he claimed.

Yurtseven also said the crisis is likely to mean the new pension regulations Turkey introduced last year will start contributing to the sector's growth, albeit there will now be a delay.

Turkey introduced vesting rights last year and unveiled regulation allowing foundations to transfer their members' pension assets to the private pension system.

"In a normal financial environment these regulations would give a notable boost to the sector," added Yurtseven.

Denizbank was acquired by Dexia from Zorlu Group in 2006.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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