Attitudes of young Turkish workers towards private pension plans

Having established public pension schemes since the 1940s, Turkey introduced the voluntary private pillar in the early 2000s and launched the auto-enrolment in the private pension plan for all employees under 45 in 2016. Nevertheless, around 60 percent opted-out out the private pillar. This thesis explores the attitudes of young workers towards private pension plan in Turkey and the factors that young workers refer to in explaining their decisions to stay in or opt out of the private pension plan. The thesis relies on a qualitative study that includes 29 semi-structured interviews with working young people between the ages of 18 and 30 in two types of workplaces in the public and private sectors, namely municipalities and shopping centers. Using thematic analysis of interview data, the thesis offers an analysis of young workers' attitudes towards the retirement, their motivations for opting out and staying in the private pension plan, their attitudes towards auto-enrolment and their reasons for trust and mistrust towards the private pension plan. The thesis finds that young workers are generally ill informed about pensions and have a myopic attitude towards retirement, which also shape their attitudes towards the private pension plan. While the nudge, in the form of auto-enrollment, helped some young workers to stay in the private plans, the thesis suggests that most of those stayed in does not see private pension plans as a long-term saving plan. The nudge, however, failed to keep most young workers in the private pension plans, who referred to their current financial needs, preferring other saving mechanisms, high retirement age and mistrust towards the state, the state of the economy and private insurance companies as reasons for their decision to opt-out.