Effects of Global Financial Crisis on Turkish Individual Pension System
Abstract
Developments in health sector and increases in welfare have raised the life expectancy of people. The individuals living longer than projected by pension schemes have posed a threat for financial sustainability of public pension systems which mostly have defined benefit pension plans. Countries have shifted from defined benefit plans generally based on pay as you go to funded defined contribution plans based and from single-tiered pension system to multi-tiered pension system in order to both maintain financial sustainability of public pension systems and enable individuals to maintain their standards of living at retirement. However large fluctuations in assets and returns of pension funds during financial crises have shaked individuals’ confidence in funded pension plans. We examine the effects of global financial crisis on Turkish individual pension system in light of data provided from Pension Monitoring Center and Organisation for Economic Co-operation and Development by using descripyive analysis. We found that there was significant slowdown in rate of increase in total net asset value of individual pension funds, negative returns provided by pension funds comprised of predominantly common stocks, therefore a shift from common stocks to bonds in asset allocation of pension funds and a significant slowdown in rate of increase in number participants to individual pension system during global financial crisis.
Key Words: Global Financial Crisis, Pension Systems, Individual Pension System
Keywords
Global Financial Crisis, Pension Systems, Individual Pension System
References
- Antolin, Pablo,“Private Pensions and the Financial Crisis: How to Ensure Adequate Retirement Income from DC Pension Plans”, OECD Journal: Financial Market Trends 2, (2009): 1.
- Antolin, Pablo ve Stewart, Fiona, “Private Pensions and Policy Responses to the Financial and Economic Crisis”, OECD Working Paper on Insurance and Private Pensions, No: 36, (2009).
- Casey, Bernard H., “The Implications of the Economic Crisis for Pensions and Pension Policy in Europe”, Global Social Policy, V:12, I:3, (2012): 246-265.
- EGM, erişim tarihi 11.01.2013, http://web2.egm.org.tr/webegm 2/chart/besgosterge/wg_sirketview_tablolu.asp?raportar1=31.12.2010&raportar2=11.01.2013&sirketlist=100&raportip=10&yayin=W.
- EGM, “Bireysel Emeklilik Sistemi Gelişim Raporları 2004-2011”, erişim tarihi 17.12.2012, http://www.egm.org.tr/?pid=360.
- Eich, Frank, “The Financial and Economic Crisis and Pension Systems: International Experiences”, Pension Corporation Research, erişim tarihi 10.01.2013, http://ssrn.com/abstract=1594106.
- Gaftoniuc, Daniela, “The Impact of the Financial Crisis upon Pension Funds”, The International Conference on Economics and Administration, Bükreş, Kasım 14-15, (2009): 309-315
- Impavido, Gregorio ve Tower, Ian, “How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter”, IMF Working Paper, No: 151, (2009).
- Natali, David, “Pensions after the Financial and Economic Crisis: A Comparative Analysis of Recent Reforms in Europe” European Trade Union Institute Working Paper 7, (2011).
- OECD, “Funded Pensions Indicators: Personal Pension Funds’ Assets”, erişim tarihi 10.01.2013, http://stats.oecd.org/viewhtml.as px?QueryName=595&QueryType=View.