Individual Pension System Research Articles

Analysis of risk-taking behaviour of individual pension system participants the case of Turkey

The study aims to analyze the risk-taking behavior of the individual pension system participants. In this context, the socio-economic factors that affect the risk taking behavior of the participants are investigated in accordance with the findings of the related literature by using the logistic regression methodology. According to the findings of the study, the duration of participation was found to be the most influential factor on the risk taking behavior of the individuals. Participants tend to invest in less risky assets as long as they stay in the system. Moreover, the participants who are male, married, do not experience a voluntary withdrawal, have a high level of education and who make higher contributions tend to direct their contributions to more risky assets. The age of the participants were not found as significant on the participant’s risk taking behavior. Moreover, the sample is divided into two according to the status of the contract (withdraw/not withdraw) and the education level of the participants (high education/low education) and the analysis is repeated for the subsamples. According to the findings of the analysis, it is observed that the explanatory power of the models and the significance levels of the coefficients of the independent variables differentiate among the sub groups.

A Minimum Pension Guarantee Application for the Individual Pension System in Turkey: A Gendered Approach

This study examines the minimum pension guarantee (MPG), a promise by government or pension fund management that at retirement, a person's annuitized benefit will be above a prespecified minimum level. For the first time, we use an actuarial model to discuss the role of MPG in lessening the gender gaps in pension incomes in the Individual Pension System of Turkey. Our results reveal that women would be more likely than men to receive pension subsidies and would require larger pension subsidies for every combination of investment decision and years of pension participation if MPGs were implemented.

Individual Welfare Gains from Deferred Life-Annuities under Stochastic Mortality

At the end of the deferment period a deferred annuity’s policyholder can choose between receiving annuity payouts or the capital accumulated. Considering stochastic mortality improvements, this is a valuable option for the policyholder. Whenever mortality improves less than expected at contract inception, the policyholder will choose the lump-sum and buy an annuity at current market prices. Otherwise, he will retain the more favorable deferred annuity. We use a life-cycle model and calculate the welfare gains of deferred annuities considering stochastic mortality improvements. Deferred annuities are found to substantially improve the welfare of an individual. The option feature is especially valuable in the presence of adverse selection problems. The results derived are relevant for individual retirement planning and pension system design.

Assessing a minimum pension guarantee for the voluntary IPS in Turkey

The returns from individual account pension plans are subject to fluctuations in capital markets. This increases income uncertainty for the beneficiary and exposes individuals to the risk of fluctuations in the economy in general and the stock market in particular. A minimum pension guarantee is a way to avoid this pitfall by providing a minimum annuity regardless of the actual investment performance of individual accounts. In this article, we present a cost analysis of a minimum benefit guarantee mechanism for the voluntary Individual Pension System in Turkey. We examine the cost estimates and the probability of providing guaranteed payments under various economic and demographic assumptions.

THE INDIVIDUAL PENSION SYSTEM IN TURKEY: A GENDERED PERSPECTIVE

The changing role of women both within family and in the labour market is one of the most crucial issues of constructing a new social policy in our century. In line with neo-liberal developments, private pension schemes have reached higher proportions in social security systems all over the world. However, it is a fact that disadvantages of women (i.e. lower level of wage, intermittent work life, and higher life expectancy) have negative consequences on private pension schemes in terms of retirement income compared with traditional pay-as-you-go systems. Turkey, in line with the current trend, introduced a privately managed individual pension scheme, the Individual Pension System in 2003. This study (conducted in 2008 - 2009), using the actual data of 102,724 participants (sampled from a total of 1,457,704) provided by the Pension Monitoring Center, examines the effects of social variables (i.e. age, occupation, province, marital status, income, social security and education) on regular contributions of individuals to the system and analyzes the gender gap by using the generalized linear model.

Assessing gender inequality in the Turkish pension system

Abstract Since the 1990s, the welfare regime in Turkey has become more market‐oriented. The introduction of the Individual Pension System (IPS), a privately managed defined contribution scheme, is part of this process. This paper uses an autoregressive stochastic model in order to show the total effect of specific disadvantages, such as a shorter working life, less earnings, longer life expectancy, real wage growth, administrative cost and risk aversion, on the retirement benefits of women in Turkey. Using an actuarial model, the article aims to contribute to the literature by investigating the gender gap in the Turkish defined contribution scheme.

An Analysis of Gender Gaps in the Private Pension Scheme in Turkey

This study analyzes the Individual Pension System, which was introduced in 2003 as an essential part of the ongoing social security system in Turkey, from gendered perspective. Gender is an important analytical category in studies on social security systems. In this context, the study aims to contribute to the literature by analyzing the private pension scheme in Turkey. By using the actual data of over 1.3 million participants in the system provided by the Pension Monitoring Center, the study aims to decompose the determinants of the discrepancy in premiums between men and women. In this context, as expected, there is no remarkable gender gap in terms of payments into the system. However, the analysis is extended to consider different income groups and the effect of some socio-economic variables such as education and human development level of the participant’s origin on the within group gender gap.