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The Insurance Association of Turkey has made a statement regarding some misleading news about BES. The statement emphasized that BES, which is critical not only for individuals to maintain their savings and living standards in retirement but also for the country's economy, continues to experience positive growth.
The umbrella organization of the insurance sector, the Insurance Association of Turkey (TSB), made important statements about the Individual Pension System (BES), which has become the "center of savings" with the comprehensive structure achieved through the regulations in recent years. TSB, which drew attention to misleading news based on incorrect information about BES in some media outlets in recent days, emphasized that BES continues to grow positively and BES funds earn above inflation in the long term.
TSB, pointing out that the statistics published in the news in question do not match official data and are misleading about the system, stated that contrary to the claims, BES entries have increased compared to previous years, while exits have decreased. According to data from the Pension Monitoring Center, the number of new participants entering BES reached 460,044 in the first quarter of 2023, while the number of exits from BES, including compulsory reasons such as death, disability, and retirement, remained limited to 264,793. When the last 5 years of changes in BES are examined, it is seen that BES continued its stable growth, especially with the entry of participants under the age of 18 into the system, which started in June 2021.
TSB also emphasized that the average returns of BES funds have outperformed many alternative investment instruments in recent years, particularly with the government's contribution rate increasing to 30%, which further increased trust in the system. The statement noted that, as a result of all these factors, the exit rates that were seen in the early years of the system have rapidly decreased. BES, which has been expanding regularly since its establishment in 2003, has reached nearly 15 million participants today, including employees in the Automatic Enrollment System (OKS). The compound annual growth rate in BES and OKS between 2013 and 2022 was 37%.
The misleading news in question also includes the phrase "100% of the contribution can be taken in retirement". The word "contribution" refers to the contributions paid by the participant, and in the current system, BES participants can already terminate their contracts and withdraw their entire savings from the system whenever they wish. The 30% "government contribution," which is unique in the world and one of the most significant attractions of BES, can be withdrawn entirely in retirement, as well as in the event of death or disability.
Furthermore, with the amendment made at the end of 2022, the possibility of receiving 'government contribution' for contributions paid above the annual limit in the following years has been introduced. Thus, a participant can receive the corresponding 'government contribution' for the total amount deposited in a lump sum, instead of dividing and deferring the desired contribution payment over the years, and then deposit the remaining contribution payment on the first day of the next calendar year within the limit of the subsequent calendar year, and carry forward any remaining contribution payment that exceeds the limit to future years, if any. In this way, participants have the opportunity to invest the entire contribution payment in funds from the beginning, instead of keeping a portion of the contribution payment for deposit in future years.
In BES, which offers funds suitable for all types of risk profiles, short-term investment preferences may be affected by economic fluctuations, but significant gains can be achieved through long-term funds. TSB emphasized in its statement that choices suitable for the long-term structure of the system protect participants and significantly increase their savings. The statement includes the following information:
"BES fulfills an important role in instilling long-term savings habits in individuals and increasing national savings, while ensuring that the interests of our participants are protected and their returns are maximized with the support of all stakeholders. When we look at past long-term returns, we see that the average return of BES and OKS funds in the 5-year period (252%) has provided a return above the CPI (%208)."
In the statement emphasizing the contribution of increasing the 'government contribution' to 30% and the provision of government contribution for bulk contributions to be given year by year in order to spread the system widely in 2022 and contribute to the sustainable growth of BES, it was stated that the practices of including employees over the age of 45 in OKS, allowing partial withdrawals and assignment of accumulations, and issuing gift certificates contribute greatly to making the system a more comprehensive structure and making savings the center of attention. |
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