05.06.2024 12:31
Participants in the Individual Pension System (BES) can use their savings as collateral when borrowing, allowing them to meet their urgent cash needs while also protecting their rights and savings.
The Insurance and Private Pension Regulation and Supervision Agency (SEDDK) opened the way for participants to transfer their savings to banks without terminating their BES contracts and use them as credit in case of urgent cash needs, except for government contributions, with the regulation it put into effect on September 28, 2023. Participants in the individual pension system (BES) will be able to meet their urgent cash needs and protect their rights and savings by using their savings as collateral when borrowing.
Mehmet Verim, Deputy Chairman of SEDDK, said in his evaluation to AA reporter that the practice, which was announced in January 2022 and the procedures and principles were determined on September 28, 2023, has been implemented as of June.
Verim said, "Participants with savings in BES will be able to transfer their savings in the relevant BES accounts to the bank for a limited period of time in order to have easier access to financing.".
Explaining how the process will work and its contributions, Verim continued as follows:
"Banks will be able to make the necessary inquiries about the BES savings of participants who will borrow credit through the central information system developed by the Pension Monitoring Center (EGM). If the collateral transfer agreement is approved, banks will request an amount up to 20% more than the borrowed credit as collateral, for example, 120 billion liras for a credit of 100 billion liras. This amount will be transferred to the pension investment fund (assignment fund) determined by our Institution and selected by the banks until the credit obligations are fulfilled."
"COLLATERALIZED SAVINGS WILL BE VALUED IN THE ASSIGNMENT FUND"
Mehmet Verim stated that the savings that banks will hold as collateral in case of non-payment of the credit debt will continue to be valued in the assignment fund, and the remaining amount in the account will be directed to the participant's choice of investment along with the contribution payment amounts to be paid to the system later.
Verim emphasized that the participant who transfers his receivable to the bank cannot transfer his savings to other companies until the transfer agreement is completed, and said:
"When the credit debt is paid, the collateral transfer agreement will expire and the amounts in the assignment fund will be withdrawn from this fund and directed to the funds chosen by the participant. If the credit debt is not paid, the bank requests the sale of the shares valued in the assignment fund in a blocked manner. The bank takes its receivable with the amount obtained from the sale of the fund shares, and if there is any remaining amount, it is transferred to the participant's BES account."
"4 SEPARATE FUNDS HAVE BEEN DETERMINED FOR THE COLLATERAL TRANSFER"
Verim, Deputy Chairman of SEDDK, said that they authorized "Anadolu Life and Pension" and "Turkey Life and Pension" companies, which proposed in accordance with the decision to establish the collateral transfer funds.
Verim said, "4 separate funds, including interest-bearing and interest-free, were determined to establish the collateral transfer funds. Both companies will offer interest-bearing and interest-free fund options. Anadolu Life and Pension company's interest-bearing fund and Turkey Life and Pension company's interest-free fund have been put into operation. The remaining funds will be available for use on January 1, 2025, as it is predicted that the volume will increase."
PARTIAL PAYMENT APPLICATION
Mehmet Verim reminded that the Partial Payment Application, which allows participants to receive 50% of the accumulated amounts in their accounts, including government contributions, without leaving the BES and giving up their rights, will also be put into operation on July 1, in cases such as education, natural disasters, marriage, and home purchase.
Verim stated that the integration processes of EGM and pension companies have been completed and the test processes have been successful. Verim stated that the principles of partial payment for natural disasters, marriage, and home purchases have been determined, and concluded his words as follows:
"We will revise the articles regulating education in line with the demands of the sector. Participants under the age of 18 started to join the system 2 years ago. Since a 5-year condition is required in the partial payment application, there will not be any applications in this field yet. We anticipate that the pool of partial payment will affect 1%. With both the partial payment and collateral transfer applications, the demand for BES will increase even more."