C-iasoS 2019, 3rd Congress of International Applied Social Sciences, İzmir, Turkey, 4 - 06 April 2019, pp.223-230
Introduction: The standard labour public social security system observed for most countries is a PAYG (pay-as-you-go) system. In PAYG systems, workers pay contributions and the collected contribution revenue is used to meet the current expenditures, especially pensions. In the 1990s, the financial troubles of these systems, coupled with more trouble on the horizon, led to wide reform waves. One typical aspect of these reforms was to adopt a multi-pillar social security system in which the public PAYG pillar was supported by a saving focused second pillar. For the Turkish case, this was in the form of the formation of IPS (Individual Pension System). The system was expected to fulfil three main expectations. Firstly, the system was expected to contribute to the deepening of the financial markets by providing financial resources for investment purposes. Secondly, the system is supposed to enable long term saving by providing generous incentives on participation. And thirdly, the IPS was expected to ease the financial troubles of the public PAYG system by reallocating the responsibility of retirement planning
from the state to the individuals. Aim: This paper investigates to what extent these expectations have been met. Method: The study undertakes a descriptive analysis of relevant data from statistics institutes. Findings: Upon investigating relevant data for the stated expectations, it is the conclusion of this paper that the IPS falls short of the expectations. The paper finishes by discussing the appropriateness of an obligatory system and points to the need for further policy debate.