Abstract:

A Private Pension Scheme is a voluntary retirement plan that allows those enrolled to increase their level of welfare during retirement, ensuring extra income by motivating them to save. In the “Automatic Enrollment System” that has been in effect since 01.01.2017, people who are under 45 and who are employed in the public or private sector in Turkey are obliged to enroll in the Private Pension Scheme. This study aims to understand why some people unsubscribe from private pension schemes with automatic enrollment, while others continue their membership of the scheme. For the study, 463 people working in public and private sector in the Isparta province of Turkey took part in a survey, including 203 people who remained in the scheme and 260 who chose to unsubscribe from the system. As could be understood from the responses, those who decided to remain within the private pension scheme did so due to the state subsidies applied, along with other reasons such as the promise of compensation payments in the future and a belief that the scheme is useful. The most common reasons for unsubscribing from the scheme were that the 10-year participation period was considered too long and that a 3 percent deduction was made on earnings subject to premiums, and that the people opted to invest their savings in other instruments.

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