Turkey is planning to create a dual-fund system to lock in savings for a longer period and increase the size of personal pension contributions, Milliyet reported, without saying how it got the information.
Deputy Prime Minister Ali Babacan may propose collecting tax rebates for savings in a secondary personal retirement fund that cannot be accessed for 10 years, according to the Istanbul-based newspaper. Unlike the primary account where individuals make their deposits, the extra fund won’t be subject to tax deductions, Milliyet said.
The government may also increase the contribution limit for tax breaks from 10 percent of a person’s annual income, according to the newspaper. The pensions industry has been pressing Turkey to double the threshold since the system was set up in 2003, Milliyet said.
With the new incentives, pension funds may grow to as much as 200 billion liras ($111 billion) by 2023 from more than 15 billion liras currently, Meral Eredenk, chief executive officer of AvivaSA Emeklilik & Hayat AS, told the newspaper. AvivaSA is a partnership of London-based Aviva Plc and Haci Omer Sabanci Holding AS that oversees Turkey’s second-largest pension fund.