Pension funds and their effects on capital markets

At the foundation of social security systems, there exists the thought of incometransfer from the young and regular working population to the old population. Thismentioned system indicates quite sensitive structure to the total amounts of socialsecurity premiums, to the administration of funds and the structure of the population.As the result of technological developments, healthy nourishment and theimprovements at the field of health, extension of human life causes more passiveinsured people to correspond to each active insured one.In a country which has got a succesful social security system, the balance ofactive/ passive insured people is 1/7, but in Turkey this ratio, starting in the year2003, was determined as 1 retired person for 1.7 working one. In our country, theratio of budget deficit to GNP occurs as 9 %. Within the budget deficits, the portion ofsocial security deficits is in the interval of 30-35 %. When the present structure andthe lived economic difficult situations are examined, it is normal for a social securitysystem that fully depends on the goverment?s financing to have difficulty.In our countr, similar ones to the lived problems concerning the social securityalso happened previously in alot of developd or developing countries. The solutionslike increasing the age of retirement or decreasing the amounts of pensions could donothing, but get the problem more and more chronic. At the end of long periodinvestigations, it has been determined that socail security, especially the system ofretirement is necessary to get in to a private enterprise. In this scope, in 1981, byperforming a complete reform, chile economic system is started to be made in toprivate enterprise. The results of the mentiond reform, in the final twenty years, havebeen able to get observed beter. As alternative to public retirement programs, inaddition to private retirement plan application, there also exist the countries whichperform private retirement plan application other than England.Beside that, the private retirement funds decrease the load of financing over theadministration, it has also got different contributions to the economy of the country.First of all, these mentioned funds assure the investors to reach the fields that theycan?t perform investment and make the capital spread at the bottom. In the countieswhich have got shallow market like ours, by means of retirement funds, theinstruments of investment will increase in varity, as the result of accumulated funds,the national Money saving and consequently the investors will increase. In USA,which has got the largest funds of the world, that the ratio of private funds to GNPreach the level of 85 % is a sign of this situation.In our country, a common text in which the idea, opinion and suggestions of allthe concerning institutions like, especially, the Law of Individual Retirement Savingand Investment System, Ministry of Finance, Ministry of Labour and Social Security,Undersecretariat of Treasury and Capital Market Board are evaluated and approvedas a part of social security reform by TBMM on 28th March 2001, and published inthe 7th April 2001 dated and 24366 numbered The Official Gazete. The Law, sixmonths later just after th date of publisment, went in to effect on the dateof 7thOctober 2001.Within the process, the companies of insurance that are active in the presentstructure, have applied Undersecretariat Of Treasury to get license to be able to go into action for the field of retirement, and the system has started to operate. With the4697 numbered Law, several differences have been performed at some Laws of taxand the participation to the system have become attractive.In the following years, as the result of improving the quality of education levelof the workers at the system, getting the information that is transferred in to thesystem continous and reliable, inspecting the funds continously, informing the publcopinion regularly about the revenue af the funds and the strucrures of billfold,keeping the going in the fund and out under control and making people conscious,the private retirement funds the seuccessful results of which have been observed fora long time in many developed countries are certain to perform solution for chronicproblems of Turkish Social Securtiy System.