TURKEY - The Turkish private pensions system will hold more than TRY50bn (€25.65bn) in assets by 2020 and even has the potential to grow to twice that size, according to Meral Eredenk, chairwoman of the country’s Pension Monitoring Centre (EGM).

Over the years, Turkey’s private pension system - which celebrates its seventh anniversary this week - has grown from eight companies to 13.

Today, these companies manage more than TRY11.5bn in 130 funds invested mainly in fixed income and equities. The system has some 2.2m members, with nearly half of them being from Istanbul and the urban centres around it.

Eredenk said the system’s current asset volume was still too limited and that, by the end of the year, pension assets were likely to reach TRY12bn.

“When looking at the proportion of pension assets to GDP in OECD countries, this ratio stands at 67.1%, while in Turkey it is 2.3%,” she said. “The TRY115bn that the system has potential to reach is an important figure for Turkish economy.”

The average return for the 130 funds is 197% over the past seven years, while the average real return has stood at approximately 65%.

Over the first 10 months of the current year, the 130 pension funds on average have returned 8.4%. 

Eredenk said: “Funds at the sector have grown by 26% over this year - in other words, the system is growing rapidly, without lending an ear to the crisis.”

Company-sponsored plans, she added, had much potential for growth. At present, company-sponsored group plans comprise only 4% of all contracts, while the ratios for individual plans and group plans are 77% and 19%, respectively.

“In developed markets, the individual and employer-sponsored plans have an even 50-50 distribution,” she said. “The minor market share of employer-sponsored plans indicates there is a lot of road ahead, but also a lot of growth potential in the market.

“However, the number of participants is growing as expected. Despite all the problems deriving from and related to the financial crisis, the Turkish private pensions system has been growing without a pause.”