The effect of the Automatic Enrollment System in Turkey on savings: Investigation in the context of nudge theory

With the increase in life expectancy, increasing long-term savings to meet the lifelong income needs of individuals has become a public policy rather than a choice. As individuals leave working life due to the loss of their working power and abilities, and with the end of income skis, it has become imperative to secure their old age. Savings are also the most important source of financing development for developing countries. Developing countries need savings to ensure strong and sustainable growth. For individuals, the purpose of saving is to secure the future in line with wealth accumulation. When people lose their ability to work, especially when they get older, they tend to save a portion of their income in order to maintain the prosperity they enjoyed when they were young in their old age. As people's life expectancy increases, the standard of retirement decreases and the tendency to save is expected to increase accordingly. Saving becomes an important and reliable source of investment for individuals to eliminate bottlenecks in retirement. Individuals are reluctant to save for the future. Public policies designed for retirement and savings aim to encourage individuals to save. The Private Pension System (PPS) contributes to the realization of the savings that individuals need to make in the long term for retirement and provides important sources of funds to utilize their savings. When the PPS failed to have the expected effect on savings in the long run, the complementary Automatic Enrollment System (AES) was introduced. The purpose of this study is to investigate whether the OES in Turkey has an increasing effect on savings in the context of nudge theory. The OCS was implemented in 2017 and added 28,132,071 million unic participants to the PPS. There was a 41.53% increase in the number of participants in the pension system through the OCS in 2017. Compared to the pension system in the world, the OES in Turkey seems to have failed to keep participants in the system in the long run, but it has managed to keep 30% of all employees in the system.