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Untitled Document
Staggered start to Automatic Enrollment


1 January 2017 sees not only the first day of a New Year, but also the start of Automatic Enrollment into the Private Pension System in Turkey.

But it would be practically impossible for insurers to enroll and set up every single employer in the country with a BES pension plan in time for the first deductions from payroll at the end of January.
So the government is authorizing a staggered start to the system: only employers with 1000 or more employees will have to join the system on 1 January 2017. Others will be added on over the next 2 years until all employers with 5 or more employees will be covered by the system on 1 January 2019.
Treasury reminds employers of their responsibilities under Automatic Enrollment


Automatic Enrollment into the Private Pension system starts 1 January 2017 and the Treasury has sent out a reminder to private and public sector employers outlining their responsibilities related to the new era of private pensions.

The reminder also contains warnings about penalties for non-compliance and so also serves to say “Don’t say we didn’t warn you”!
Key points they draw to employers' attention are:

Employers need to identify specific directors (either in head office or field offices) who are authorized to sign a pension agreement with a BES company

Tourism crisis and coup attempt hit unemployment


Data released yesterday by the Turkish Statistical Institute demonstrate that unemployment, which was already at high levels due to the tourism crisis, rose even further following the attempted coup on 15 July.

The trend began back in May, which is usually the lowest month of the year for unemployment as hotels and businesses that serve tourists take on seasonal workers for the summer. But in 2016 instead of May's unemployment rate being the usual 1 basis point lower than April's, it was 0.1 basis points higher (at 9.4%).

The instability brought by the July coup attempt did more damage to the tourism scetor which is the motor of Turkey's summer economy. 

Demir Hayat now owned by EMF New Europe Insurance Fund


On 23 November 2016 the shares of Demir Hayat Sigorta AŞ (which were owned 100% by Demir Finansal Grup Holding AŞ of Turkey) were transferred to Demir Hayat Group BV of the Netherlands.

But the ultimate ownership of the company is EMF Capital Partners, a London-based private equity firm which aims to link suppliers of capital in developed markets with companies in emerging markets.
BES pension funds now as popular an investment as term bank deposits


Every quarter ING Bank publishes a report into Turkey’s Investment Preferences. The most recent version of the report (Q3 2016) gives pension companies the good news that BES pension agreements are the second most popular investment vehicles (amongst those who actually make any investments).

At 26% they were only just pipped into first place by interest-bearing term bank deposits at 27%.
Government's plans for our sector in 2017


Insurance companies have by now completed their business plans and projections for 2017. In the same way, governments also prepare their task list for the insurance sector in the New Year.

In Turkey we can obtain financial information about these projects from the Draft Budget Booklet for 2017 prepared by the Under Secretariat of the Treasury and submitted to Parliament.
We were already expecting automatic enrollment in the Private Pension System to feature in these plans. Other key items include:
Nothing's certain except death and taxes


There may be some argument about who first said that the only dead certs are that both the angel of death and the taxman will come after you, but we all agree in the veracity of this claim.

Three of Turkey’s life and pension companies star in the “tax record-breakers” list for 2015 – a strangely Turkish affair which publicises who contributed the most to government coffers.

The list is dominated by banks and state companies, but there are a number of well-known industrial companies as well as names from the high Street on it. To enter the top 10 a company had to have a tax assessment of at least 274 million TL. 

Government rethinking their plans for mandatory private pensions


 Back in May Deputy Prime Minister Mehmet Şimşek announced draft provisions for mandatory private pensions as part of the BES system. Following criticism from trade unions and reservations expressed by employer confederations it seems that the government are rethinking their plans.

 The press is reporting that the initial plans have been temporarily shelved. They anticipate a revision being announced in the autumn, and in the meantime expect the government to consult more widely with unions, employers and the insurance sector.
Takaful insurance trade association formed


With the emergence of a number of Islamic finance banks and related insurance companies in Turkey, the “Katılım Sigortacılığı Derneği” – a new association related to takaful insurance – has been established.

Called KATSİDER for short, this organisation exists to:
• Develop the takaful insurance market in Turkey
• Support those individuals and organisations in Turkey who are working in accordance with takaful insurance principles.

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