FEATURES THAT INFLUENCE THE EXIT DECISION FROM THE PRIVATE PENSION SYSTEM IN TURKEY
AbstractIn Turkey, the Private Pension System was given a head start in 2003. Although the system aims to
provide supplementary income to the public pensions at retirement, observations reveal that many participants
prefer to exit the system before retirement. The purpose of this study is to identify the characteristics of
participants, who are more likely to exit earlier than retirement using the total population of contract buyers since
the start of the system until 2011. The data is obtained from the Pension Monitor Center, and covers the
customer and contract characteristics of more than 75% of all lapse types in the period. Impact of demographic
factors and contract features are examined using the logit model. We divide the sample into different groups of
customers according to their monthly contributions to the system. The results of econometric analysis reveal
evidence of a significant relationship between exit decision and features such as education level, occupation,
total accumulated savings, geographical regions, pension sales channel and payment instruments. Staying long
enough in the system increases participants’ continuity. Our elaborations also provide some tips for pension
companies to ensure longevity and retirement of customers.
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