Compulsory pension system to come online by January 2017 in bid to boost savings

The draft bill, which revises the BES so as to stipulate automatic coverage for all wage earners under the age of 45 to the system by their employers, was accepted at a parliamentary commission late Aug. 9 in a bid to boost the country’s savings.

Employers will include their employees in a pension system which is offered by a company authorized by the Treasury in line with the new regulation.

The contribution margin of the employee will equal some 3 percent of the actual premium yield. The cabinet will be able to double this amount, decrease it to 1 percent or put a fixed limit on the contribution margin.

With the new system, some 100 billion Turkish Liras (around $34 billion) of additional resources will be created over the next decade with the expected participation of some 6.7 million people in the private pension system, according to officials.

Workers who do not want to use the plan will be able to exit during a two-month period, and their savings will be returned. 

The low private saving rate and high current account gap has long been the Achilles heel of the Turkish economy.