As BES Marks 20 Years, It Continues to Contribute to the National Economy

As the Private Pension System (BES) celebrates its 20th anniversary, it not only provides returns through retirement funds but also continues to enhance long-term savings levels domestically, contributing to the country’s economy.

By the end of June, the total fund amount held by participants in BES reached 839 billion 387.5 million Turkish Lira, while the government contribution fund amount totaled 118 billion 584.5 million Lira. Consequently, the total fund size of participants amounted to 957 billion 972 million Lira. In the Automatic Enrollment System (OKS), the total fund amount held by participants, including government contributions, rose to 72 billion 530.2 million Lira.

Increase in BES Fund Size Surpassed 254 Billion Lira

By the end of 2023, the number of participants in BES had reached 8,676,046, and the total fund amount held by these participants was recorded at 625 billion 517.8 million Lira. The government contribution fund amount was reported at 77 billion 750.8 million Lira.

During this period, examining the OKS, the fund amount accumulated by 7,303,050 employees was 49 billion 972.5 million Lira, with government contributions amounting to 3 billion 180.4 million Lira. The sector ended 2023 with a total fund size of 756 billion 421.5 million Lira, including BES and OKS, and a total of 15,979,096 participants.

Accordingly, between the end of 2023 and June 28, the participant fund amount in BES increased by 213 billion 869.7 million Lira, while the government contribution fund amount also rose by 40 billion 833.7 million Lira. This represents a total change in fund size of an increase of 26.7%. In the same period, the fund amount accumulated by OKS participants, including government contributions, increased by 19 billion 377.3 million Lira.

Considering the fund amounts of participants in both BES and OKS, alongside government contributions, there was an increase of 274 billion 80.7 million Lira from the end of 2023 up to June 28, 2024. During this period, the number of participants in BES increased by 459,900 people to reach 9,135,946, while the total number of participants, including OKS, climbed to 16,457,210. Thus, the total number of participants in the system grew by 3% in the first half of the year.

240.1 Billion Lira of Savings in Interest-Free Funds

Out of the total fund amount in BES, 651 billion 648.1 million Lira is in interest-bearing funds, while 187 billion 739.4 million Lira is in interest-free funds. The government contribution fund amount comprises 107 billion 756.3 million Lira in interest-bearing funds and 10 billion 828.2 million Lira in interest-free funds.

The fund amount accumulated by 7,321,264 employees in OKS includes 29 billion 81.3 million Lira in interest-bearing funds and 38 billion 901.8 million Lira in interest-free funds. Additionally, the government contribution fund amount of 4 billion 547.1 million Lira consists of 1 billion 857.2 million Lira in interest-bearing funds and 2 billion 689.9 million Lira in interest-free funds.

Participation of Under-18s in BES Exceeds 1.2 Million

The application introduced in Turkey three years ago, aiming to include voluntary participation of children under 18, continues to grow.

As of June 21, the fund size of participants under 18 reached 22.3 billion Lira, with 17 billion 823.2 million Lira contributed by participants and the government contribution fund amounting to 4 billion 501.9 million Lira. A total of 1,229,379 children have joined the system, with the highest participation coming from zero-year-olds at 106,926.

Between December 31, 2023, and June 21, 213,835 individuals joined the under-18 application, increasing the fund size, including government contributions, by 79% to 22 billion 325 million 171.8 thousand Lira.

Erol Öztürkoğlu, General Manager of HDI Fibaemeklilik, noted that the growth of the pool is significantly influenced by market returns.

Öztürkoğlu recalled that the sector aims for a target of 1.3 trillion Lira by the end of the year, stating:

“Even with regular payments made by participants and new participants joining the system, the growth in the fund is driven by asset returns. Looking to the second half of the year, increases are expected in both the stock market and precious metals. Therefore, I foresee that the 1.3 trillion Lira target will be exceeded by the end of the year.”

Öztürkoğlu emphasized that a decrease in inflation indicates that saving rates will rise, allowing returns on investments to be more apparent, which will positively impact fund growth in BES.

Regarding the partial withdrawal introduced in July, Öztürkoğlu stated that it would not have a short-term effect on the pool. He provided the following information:

“The partial withdrawal serves a specific subset based on the conditions provided. Thus, in the short term, it may not have a significant impact before the end of this year, but in the medium to long term, it will prevent exits from the system. In terms of collateralized funds, the current market impact will be limited, given that banks still have certain restrictions on lending individual loans. What is primarily important is the existence of these mechanisms in the system, which will create more impact on participation and retention in the future.”

Öztürkoğlu pointed out that the rights afforded to investment funds in terms of diversity should also be granted to individual retirement funds.

He mentioned that there are currently no foreign currency funds established within the system and stated, “Regulations on how to utilize venture capital funds more effectively in individual retirement will contribute positively to the investment universe in BES and attract qualified long-term investors into the system.”


Source