Pension funds $78 trillion

In the OECD 2026 Retirement Outlook Report, it was stated that studies conducted in various countries showed that a large portion of the population may be unprepared for retirement. For example, it is estimated that the retirement income of 73 percent of the working-age population in the UK will remain below a moderate retirement living standard. It is estimated that 39 percent of households in the United States will be at risk of not being able to maintain their pre-retirement standard of living.

According to the report, in 40 of the 41 countries surveyed, employees must participate in the private pension system in addition to the compulsory pensions paid by the Social Security Institution in Türkiye in order to reach their retirement income target. The report offered various recommendations to governments to encourage employee participation in the retirement system. These include pension funds that also include employer contributions. It was stated that employers can make contributions on behalf of their employees beyond legal requirements to attract and retain talented workers.

Pension funds around the world are based on the automatic participation of employees, mandatory participation or voluntary participation. In Türkiye, participation is mainly voluntary. Employees have to enter the automatic enrollment system (OKS), which started in 2017, but they do not have to stay.

PENSION FUNDS ARE 78 TRILLION DOLLARS IN OECD COUNTRIES

According to the report, pension assets in OECD member countries reached 78 trillion dollars by the end of 2025, increasing by 11.3 percent compared to 2024. Pension assets increased from 104.5 percent of GDP in 2024 to 105.6 percent of GDP in 2025. 70.4 trillion dollars of the assets in pension funds consist of funds managed by private pension companies, and 6.4 trillion dollars consist of public pension funds.

Of the $78 trillion in pension assets across the OECD, $51.8 trillion belongs to the United States. $2.3 trillion of assets in the United States consist of public pension plans. In other words, two-thirds of retirement assets across the OECD belong to the USA alone.

BES IN Türkiye IN ITS INNOVATION

The assets of pension funds in the USA, Canada, Denmark, Switzerland and Australia exceed 100 percent of national income. In Türkiye, this rate is only 3.4 percent of the national income. The total fund size in the voluntary private pension system and automatic participation system in Türkiye is 2.51 trillion lira. This corresponds to approximately 50 billion dollars.

Among OECD member countries, the highest growth in pension funds in terms of local currency was in Türkiye and Greece. It was emphasized that high inflation was also effective in the high growth in Türkiye.

PENSION FUNDS ARE GROWING WITH COMPOUND INTEREST

The OECD report emphasized that the return on individuals' retirement funds increases over time as the amount of assets increases, and that this increase is due to the effect of compound interest. It was stated that compound interest is obtained by earning interest on both contributions and past returns. It was noted that the effect of compound interest continues even when contributions stop.

PENSION FUNDS INVEST IN BONDS AND STOCKS

According to the report, pension funds invest mostly in bonds and stocks. In 71 of the 81 countries, including 38 OECD member countries, more than 50 percent of the pension funds' investments were bonds and stocks. In the last 25 years, stocks and bonds constituted more than 60 percent of pension fund assets on average.

In Türkiye, those who retire from private pension funds generally receive a lump sum payment. Anyone who wishes can also receive the money accumulated in the fund for a certain period of time, such as 5 or 10 years.

The lump sum payment rate is 55 percent in Australia and nearly 100 percent in Belgium, which are countries where the private pension system started much earlier than Türkiye. In countries such as Chile, the Netherlands and Norway, lifetime payments are mostly made. However, in Finland, Latvia and the Netherlands, only the money saved in workplace retirement plans such as our OYAK is paid out as lifetime income. Chile, the Netherlands and Norway have regulations discouraging lump sum payments. In countries such as Austria and Australia, lump sum payments are preferred by people with little savings.