Short and long run effects of selected macroeconomic variables on the size of the private pension system in Turkey

Private pension system is a private retirement system that allows people to obtain additional income to maintain their living standards when they retire by directing the small savings they make during their business lives to long-term investments. The aim of this study is to econometrically determine the possible short- and long-term effects of selected macroeconomic factors on the size of the Private Pension System (PPS) in Turkey. For this purpose, the short and long-term effects of unemployment, inflation, interest, budget revenues, economic growth, and savings of different definitions on the size of PPS, represented by PPS contributions and the number of PPS participants, were analyzed under the ARDL approach. As a result of the econometric analysis, there is a negative relationship between the number of PPS participants, PPS contributions and private savings. It was concluded that there is a direct relationship between PPS contribution and the number of PPS participants and public savings and foreign savings. Additionally, as a result of the Toda-Yamamoto causality test, a unidirectional causal relationship was detected from economic growth and budget revenues to PPS contribution, and from PPS contribution to exchange rate and interest rates. It was concluded that there is a mutual causal relationship between PPS contribution and inflation. On the other hand, there is a one-way Granger causal relationship from economic growth, unemployment rate and budget revenues to the number of PPS participants, and from the number of PPS participants to interest rates. Key Words: Individual Pension System, ARDL Model, Toda-Yamamoto