An appraisal of Turkey's voluntary individual pension system from a perspective of pension equality

Abstract

AbstractSince 2003, Turkey's pension policy has been increasingly based on facilitation of individual savings administered by private pension funds. The introduction of private pensions is expected to reinforce inequalities as a result of socio‐demographic features and pension system design. This article evaluates voluntary individual pension system with a perspective on pension equality. Monthly contributions to pension accounts are explored on the basis of socio‐economic and demographic characteristics of the customers of a currently operating pension company. Findings reveal that differences in people's saving capacities have become a source for pension inequality. Furthermore, state subsidies, which increase in proportion to individual contributions, strengthen unequal distributional dynamics. Pension privatization harms social solidarity as it intensifies existing social inequalities.