150
Box 4.14: Turkey’s Pension System
The private pension system is regulated and supervised by
the Undersecretariat of Treasury and CMB. The Turkish
private pension system law was first approved in 2001 and
started functioning in 2003. In August 2016, the Turkish
Parliament approved an amendment to the law governing
individual pension savings and the investment system.
Based on the amended law, the pension system will
incorporate an integrated automatic enrolment practice,
commencing January 2017. Participating employees have the
right to withdraw from the pension plan within 2 months
from the date when the employer notifies the employee of its
involvement in the pension plan. If the employee withdraws
from the pension plan, contributions will be returned to
them within 10 days, together with investment income, if
any. To encourage the working population, the employee will
receive a state subsidy in their pension accounts, at a rate of
25% of their paid contributions. Additional incentives have
been provided to Turkish working individuals to remain in
the system.
Fact sheet End-2016
Participants 6,627,025
Pension Mutual
Funds (TL)
53,409,391,715
State Contribution
Funds (TL)
7,438,179,620
Intermediaries 39,680
Pension companies 18
Notably, 7.8 million contracts were in
force as at end-2016. The number of
participants had grown to around 10%
and exceeded 6.6 million when
compared annually. Within the same
period, the total net asset value of the
funds surged 24% to TL53.4 billion.
Source: Pension Monitoring Centre (2017, July)
Box 4.15: Turkey’s Investment Funds
Investment funds are the pool of asset which is established by
portfolio management companies under the fund rules in
conformity with the fiduciary ownership principles on the
account of the savers, with money or other assets gathered
from savers pursuant to the provisions of the CMB Law in
return for fund units in order to operate the portfolio or
portfolios consisting of assets and transactions specified by
CMB Communique.
Umbrella fund is the investment fund covering all funds the
units of which are issued under a single fund rules. Investment
funds are required to be founded in the form of an umbrella
fund. Umbrella funds may be founded in ten types which are
listed in Communique. According to portfolio sizes of
investment funds looking at the distribution of fund types,
“Debt Instruments Investment Funds” and “Money Market
Funds” constitute 82% of investment funds total portfolio size
at end-2016. Debt Instruments Funds are which at least 80%
of the fund net asset value is permanently invested in public
and/or private sector debt instruments. Money Market Funds
wholly and permanently invest in highly liquid money and
capital market instruments with maximum 184 days to the end
of maturity, and the daily calculated weighted average
maturity of portfolio of which is maximum 45 days.
Fact sheet End-2016
Investment Funds
(TL billion)
43,755,33
Investment Funds
(Number)
433
Investors 3,089,530
The total net asset value of the funds
had grown to 12% to TL 43,75 billion
when compared annually.
Source: CMB (2016)
Due to the small base of domestic institutional investors (insurance companies, pension funds,
investment funds and other collective investment schemes), the funding of domestic
government debt has largely been sourced from corporates, financial institutions and foreign