6 mln Turks hold TL 47 bln in private pension pool

Mehmet Simsek, the deputy prime minister in charge of economic policies, said on Tuesday that the government will maintain the package despite its high costs. In his speech at a conference in İstanbul, Simsek said the system costs as much as TL 3.5 billion ($1.2 billion) a year.

Introduced in 2013 to boost the domestic saving ratio, government support contributes an extra TL 25 for every TL 100 that consumers deposit in the private retirement system.

Vahdettin Ertas, chairman of the Capital Markets Board (SPK), announced on Monday that the total amount in the system has reached TL 47 billion, 131 percent more than the corresponding figure only three years ago.

The number of account holders also saw a 90 percent rise in November compared to the figure at the end of 2012, according to SPK data.

The main drivers of such a boost in figures are the incentive package and some amendments the government made to the Capital Markets Law, in accordance with EU standards, at the end of 2012 to facilitate transactions for portfolio management firms, Ertas said.

The system allows every consumer aged 18 or above to load money into their private pension accounts and qualify for retirement at the age of 56 if the person remains in the system for at least 10 years.

A low saving ratio is among the Achilles heels of the Turkish economy, with rating agencies and consulting firms highlighting this weakness in every report they release on the course of the Turkish economy. Since Turkey has followed a growth strategy that relies mostly on foreign funds rather than internal savings over the past decade, it has become vulnerable to external shocks that bear the risks of changing global investment routes.