What are the best models for the pension scheme? - State-private sector cooperation to strengthen the third pillar
Many countries have developed successful models for strengthening the third pension scheme, which is based on voluntary savings of citizens and managed by private financial institutions. In these models, the state plays a key role by creating fiscal incentives, providing financial support and ensuring a strong regulatory framework.
Turkey is considered one of the successful examples in this regard. The voluntary private pension system in Turkey is known as BES (Bireysel Emeklilik Sistemi) and is designed to complement the public pension. The reform was undertaken in 2013, when the government introduced a state co-financing scheme to encourage citizen participation. Thus, for every contribution that a citizen deposits into a private pension fund, the state adds 30% of the amount as an additional contribution. This state bonus accumulates in the individual's savings account and becomes fully available only if the participant remains in the system for a long period. This mechanism has been one of the main factors that has increased participation in the private pension scheme in Turkey.
In Germany, the “Riester” pension scheme operates, which is a private pension product subsidized by the state. Citizens who contribute to this scheme benefit from direct annual subsidies from the state budget and significant tax breaks. The funds are managed by private insurance companies and financial institutions, while the state guarantees strong standards of supervision and transparency.
In the United Kingdom, one of the most important reforms has been the automatic enrolment system in pension schemes. Since 2012, employees have been automatically enrolled in a private pension plan through their employer, with the option to opt out if they do not wish to participate. Contributions are made by both the employee and the employer, while the state offers tax breaks for savings. To ensure universal access, the government also created the public fund NEST (National Employment Savings Trust), which operates alongside private funds.
Another well-known model is the KiwiSaver program in New Zealand, which is based on cooperation between the state, employers and the financial sector. Employees are automatically enrolled when they start a new job, while contributions are made by the employee and the employer. The state provides support through annual additional contributions for citizens who save regularly, as well as strong supervision of pension funds. This model has managed to significantly increase participation in pension savings.
Despite differences between countries, most successful models share some common elements such as tax breaks for private pension contributions; subsidies or complementary contributions from the state; automatic enrollment mechanisms to increase participation; strong regulatory oversight to ensure the safety of funds, as well as transparency and low administrative costs.
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