3 rd Financial Literacy and Inclusion Conference was held in cooperation with TEB and FODER and the contributions of financial awareness to the personal pension system were discussed. Former Minister of Labor and Pensions of the United Kingdom, Baroness Dr. Ros Altmann, who attended the conference, stated that increasing the level of financial literacy in the UK has positively affected the participation rate in the personal pension system.
3rdFinancial Literacy and Inclusion Conference was held in cooperation with TEB and FODER and the contributions of financial awareness to the personal pension system were discussed. Former Minister of Labor and Pensions of the United Kingdom, Baroness Dr. Ros Altmann, who attended the conference, stated that increasing the level of financial literacy in the UK has positively affected the participation rate in the personal pension system.
The 3rd Financial Literacy and Inclusion Conference, which was held in cooperation with TEB and FODER, took place on 15 January. Former Minister of Labor and Pensions of the United Kingdom, Baroness Dr. Ros Altmann and OECD Social Policy Department Specialist Dr. Boele Bonthuis joined the conference as keynote speakers and at the conference, the importance of savings, behavioral economy, retirement economy, retirement funds and advantages along with the savings in prolonged life cycle and
the importance of Personal Pension System was emphasized.
At the conference, which started with the opening remarks of TEB General Manager Ümit Leblebici and FODER's Chair Özlem Denizmen, President of the Banking Regulation and Supervision Agency (BRSA) Mehmet Ali Akben and Republic of Turkey Prime Ministry Undersecretariat of Treasury Directorate General of Insurance Department's General Manager Dr. Şerif Çakırsoy gave remarkable examples about the subject in their speeches.
By giving examples from the development of the UK pension system Dr. Ros Altman stated that; "Pension Funds means not just a money. It rather means the future of the people, to have better life standards in their advancing ages". Altman, who drew attention to the fact that most of the time, individual pension companies do not fully understand the needs of the participants, also highlighted that the basic need of the participants is to feel 'good' about the money they allocated for personal pensions. Altman explained that with the news about high cuts and poor management of the funds, the participants stopped investing in the system and therefore the pension companies, who considered this fact, today provide services with more affordable prices and they tend to generate social responsibility projects for increasing the loyalty of the participants.
The most important issue that the speakers draw attention to was; if the financial literacy level can increase, this would bring two important benefits in terms of retirement preferences. The first of these was that the savings are kept in the system for longer by increasing the interest in the annual income insurance option that will pay a lifetime pension. Second of these was that the conscious increase made by the participants in their contribution rates paid in the active period leads a pension period where there is a higher level of saving and welfare.
FODER's Chair Özlem Denizmen stated in her opening remark that the aim of the conference was to increase the number of participants in the BES to 20 million with reforms and financial literacy as of the end of 2017.
"Personal pension is the cornerstone of the increase in our country's saving rates. In order to increase BES, we need to increase the level of financial literacy of individuals. We, as FODER, are working in this regard. Also, we believe that in the BES system, a new structure is needed, which is more transparent, simpler and more integrated with other institutions and products of capital markets. New generation BES, Automatic Enrollment System should be in a modular format which is available to provide service to Unemployment Fund, SGK Funds, Severance Pay Fund and Turkish Wealth Fund's capital market investments, when needed. In this way, the number of participants can easily be increased to 20 million from 10 million. In this scale; in order to create an inclusive pension system, management of the system should be centralized, there should be close cooperation with universities and international organizations and the latest findings of behavioral finance on this practice should be used.
Financial Literacy and Inclusion Index, which was prepared in cooperation with TEB and Boğaziçi University, was also announced for the first time at the conference.
TEB General Manager Ümit Leblebici stated in his speech at the opening that they have been trying to explain the awareness raising activities and trainings held in this field in terms of financial literacy. Leblebici stated that “we can call financial literacy as "financial health" as well. We can consider the index as a check-up. Here we will discuss the financial health of our society with the data presented by the Index".
Akben said that there is a need to increase the financial inclusion, to raise the level of knowledge and awareness of financial consumers and to address the policies for protection of financial consumers with a holistic and coherent approach; therefore to a prepare a strategy and action plan on financial inclusion, financial education and the protection of financial consumer became the agenda items of Financial Stability Committee having the most priority.
Republic of Turkey Prime Ministry Undersecretariat of Treasury Directorate General of Insurance Department's General Manager Dr. Şerif Çakırsoy stated that "We need to explain the saving account for the long-term pension system."
Dr. Şerif Çakırsoy highlighted that "Personal Pension System is a field overemphasized in terms of increasing our national saving rates and thus, providing long-term funds to our economy and the development of our capital markets. According to the data, as of the end of 2017, of 63000 participants who left the system by enjoying the right of retirement, 60491 of them preferred to take their savings collectively. When the savings in retirement fund are analyzed, it is seen that the average savings per retired participant who preferred to take their savings collectively is 74000 TL; the starting amount of programmed repayment is 154000 TL and the starting amount of annual income insurance is 77000 TL. These less-preferred options are important in terms of providing longer-term and secure retirement welfare for the participants and of transforming those savings to investments continuously."
At the conference, the results of Turkey Financial Literacy and Inclusion Index, which was held this year for the fifth time in cooperation between TEB and Boğaziçi University, was shared.
According to Turkey Financial Literacy and Inclusion Index, Turkey's financial literacy index was announced as 60.8. It is observed that the index rate for financial access has reached to 44.1. Compared to the rate of 2016, which was of 38.2, there is a significant increase observed.