Pension Mutual Funds at BES
As a participant in the Private Pension System (BES), your retirement contributions are invested through Pension Mutual Funds, which are similar to mutual funds. A pension mutual fund is an asset created for the purpose of distributing risk and managing the contributions received by the pension company within the framework of your pension contract and monitored on your behalf in the Private Pension System accounts, on the basis of fiduciary ownership. It is established by the pension company and managed by portfolio management companies. It can only be purchased by people who have entered the BES. The types of pension mutual funds are determined by the legislation according to the investment instruments they contain. For example, if more than 80% of the fund consists of public debt instruments, it is called a public debt instruments fund, and if it consists of liquid investment instruments, it is called a liquid fund. Each pension company in BES has different types of pension mutual funds established in accordance with the legislation. Fund types can be listed as stock fund, debt instrument fund, participation fund, mixed fund, money market fund, precious metals fund, index fund, fund basket fund, contribution fund, variable fund, standard fund and life cycle/target fund.
When entering the BES, as a participant, you choose the pension mutual funds to be purchased with your contributions. In this sense, Pension Mutual Fund Content is very important. Choosing the right fund can increase the return on your Pension Investments.
Pension Mutual Funds and Takasbank
Fund securities are kept in Takasbank on behalf of the individual. With the “Takasbank Information System” service over the e-government system, you can check the current fund values in your accounts as well as the state contribution amounts transferred to your accounts in terms of the number of funds and market value.
Pension company assets and pension mutual fund assets are separate. Fund assets cannot be pledged, cannot be provided as collateral other than transactions related to the portfolio, cannot be confiscated by third parties and cannot be included in the bankruptcy estate.
Pension Mutual Funds and Contribution
Fund shares purchased with your contributions are recorded in your Private Pension accounts and accumulate over time as you pay your contribution. Share values of Pension Mutual Funds are announced on a daily basis. The fund’s share value is obtained by dividing the net asset value by the number of outstanding shares. You can also monitor the unit share value of your funds and the total amount of savings in your account on a daily basis.
One of the most basic methods of determining the returns on pension mutual funds in the private pension system is to compare the unit price of the fund at the beginning of the period with the unit price at the end of the period. However, fund price development analyzes made as a comparison of the price at the beginning of the period and the end of the period are insufficient in determining the value that the participant’s savings will reach and the income obtained. Such an increase in value is only a valid method for participants who start to use all their savings collectively in the PPS at the beginning of the term and leave at the end of the term without paying any contribution during the term.
In the private pension system, 95% of the participants pay their contributions monthly. In this case, an average participant receives pension mutual funds at 12 different prices in 12 months of the year. While the contribution paid at the beginning of the year is beneficial for one year, the contribution paid in the last month of the year is only benefited for one month. In the private pension system, the return is called the internal rate of return, and it should be taken as the average value that equates the total principal reached at the end of the period for all the investments made by the person who invests in the fund(s) with a certain amount at the end of each month, to the fund value at the end of the period.
You can divide both your total savings and the contributions you will pay among pension mutual funds and create a basket. While making your choices, you should consider that the rate of return may be different according to the investment instruments in each of the pension mutual funds, and the investment performance of the funds is determined daily according to these investment instruments.