You might ask what is the relevance, so here goes.
Today's topic is about the withdrawal from the Personal Pension System ('PPS'), which was introduced to our lives in 2001, due to death.
The PPS was introduced in 2001 with a law enacted in the Official Gazette. The main features that distinguish the system from life insurances are:
1. Since there is no risk as with life insurance, the amount allocated for the risk premium is not deducted from the contributions invested, so the amount invested is higher.
2- There is no high intermediary commissions deduction as in life insurance, there is a fixed entrance fee and daily fund management expenses, so the amount invested is still higher.
3- In order to retire, one must stay in the system for at least 10 years and reach the age of 56.
4- There are certain rules in case of leaving the system for any reason
5- In order to incentivize the system, the state contributes an additional 30 percent of each contribution. This is a great advantage. Rules are also in place to qualify for the state contribution.
6- When we stay in the system for a long time, its contribution to the economy is also significant.
7- The system has been improved over the years. Today, there are also plans for those under the age of 18.
8- Innovations such as corporate tax advantages and compulsory PPS have been introduced.
9- If participants are not satisfied with the performance of the pension company they choose or want to change their funds, they are granted rights.
According to Pension Monitoring Center data dated March 31, 2024, the total fund size of the PPS reached 841.6 billion TL.
I recently got a call from a friend. Their mother, who had been ill for a while, had passed away. As they say, Death is Just, Inheritance is Fair. Two siblings, as legal heirs, applied to the pension company to inherit their mother's savings in the PPS. Let's look at what happened next.
15 days after the death, they contact the representative of the pension company through the banking branch and inform them of the situation. The Customer Representative explains what needs to be done after the passing of their mother. They gather and submit the necessary documents according to the information provided to them and start to wait.
15 days pass. No word. They call the bank and are informed that there are missing documents. They ask which documents are missing to get it done, only to get no response.
So they wait a little longer. Then they ask again. Same answer, 'missing documents'. This time they visit the bank branch to find a solution. The customer representative at the bank directs them to the call center. They spend a lot of time at the call center. The answer remains the same. They try for days. Finally, they learn that the missing document is the birth certificate of their deceased mother. The birth certificate is not among the documents requested after death, and there is also the question of whether birth certificates are issued for the deceased. All this time passes, but there is no solution, no answer, no payment due to missing documents.
According to Pension Monitoring Center data dated March 31, 2024, the total fund size of the PPS reached 841.6 billion TL.
I recently got a call from a friend. Their mother, who had been ill for a while, had passed away. As they say, Death is Just, Inheritance is Fair. Two siblings, as legal heirs, applied to the pension company to inherit their mother's savings in the PPS. Let's look at what happened next.
15 days after the death, they contact the representative of the pension company through the banking branch and inform them of the situation. The Customer Representative explains what needs to be done after the passing of their mother. They gather and submit the necessary documents according to the information provided to them and start to wait.
15 days pass. No word. They call the bank and are informed that there are missing documents. They ask which documents are missing to get it done, only to get no response.
So they wait a little longer. Then they ask again. Same answer, 'missing documents'. This time they visit the bank branch to find a solution. The customer representative at the bank directs them to the call center. They spend a lot of time at the call center. The answer remains the same. They try for days. Finally, they learn that the missing document is the birth certificate of their deceased mother. The birth certificate is not among the documents requested after death, and there is also the question of whether birth certificates are issued for the deceased. All this time passes, but there is no solution, no answer, no payment due to missing documents.
A quick word of information: The documents that must be submitted to the PPS in case of death are stated on the Pension Monitoring Center website as follows.
“In order for the requests of the beneficiaries or legal heirs of the deceased person to be processed, pension companies must submit TÜİK Death Certificate (obtained from the health institution, municipal physician, community health center, gendarmerie station commanders or village headmen depending on the circumstances of death), Inheritance Decree (obtained from a notary public or the relevant court), Form or petition prepared for the notification of death, Photocopy of the identity cards of the heirs included in the inheritance declaration and demand deposit TL IBAN numbers registered in their own names, Inheritance and transfer tax clearance letter. You can contact your pension company to find out the full list of documents requested by your pension company.”
There is a list of required documents on the website of the Pension Company in question as follows: “For Death Claims
1. Death certificate, burial license or burial permit
2. Inheritance certificate (certificate of inheritance) can be obtained via e-Government.
3. Photocopy of ID and IBAN information of all beneficiary(ies)
4. Signed form of all beneficiary(ies) regarding inheritance and gift tax preference."
The birth certificate is not among the documents requested for the withdrawal.
The two siblings who lost their mother did not need the money accumulated in the PPS, but they could have. They may have looked on the internet and thought that the standard processing time was 20 working days and that the procedures were prolonged. As it turned out, it took even longer than that from the time they applied to the time they called me.
Today, every purchasing decision is based on experience. Be it a restaurant we go to, a movie we watch, a vacation spot, clothes, school, anything we can think of, everything is bought or not bought based on "Customer Experience".
PPS is not insurance; pension companies are completely separate entities from insurance companies. There are separate licensing processes in order to qualify as a pension company. However, even the name of the pension companies is often similar to that of well-known insurance companies, and the companies act in partnership by using the power of brand recognition. This is a strong and reliable stance. On the other hand, whatever the insurance branch, service or problem, it is still experienced as a single brand. It's a very delicate balance. A negative experience on one side affects the entire image of the brand, let alone the brand, the entire sector and the belief in insurance.
Speaking of which, I would like to share another experience. Our house help needed cash. She had modest savings in the PPS. She thought she had to withdraw it all, and when I told her about the right to partial withdrawal, she immediately applied to the bank to withdraw some of her own savings. I call it an ordeal now, because you fill out one form, go to the branch, sign another form, then wait 45 days, then go to the branch again to sign, 2 months! What's done is done, she had a lot of trouble until she paid off her debts while she had the money. (Addendum - TSB stated that since the partial withdrawal right will enter into force on July 1, 2024, the procedures may have taken time).
Let's get back to the subject. My friend wanted to ask me about it. I asked him to forward all the documents and passed them on to a colleague who I thought would be helpful. They were immediately engaged and the savings were transferred to the accounts of the two brothers within 3 days.
If they had continued on their own, how many more days/weeks/months would they have spent? What happened is like the last line of the Eagles' legendary song Hotel California “You can check out any time you like, but you can never leave”
My friend questioned whether this delay was motivated by the fact that the longer the delay, the more earnings there are? Is this a tactic? Of course not. Although the information requested in case of death is the same between companies, some companies have the following statement: “As a result of the evaluation of the documents you send, additional documents may be requested if deemed necessary.” Therefore, the reason for waiting may be due to different document requests or internal processes of the companies rather than earnings.
Companies to which people entrust their savings and which are constantly audited, avoid any potential damage to brand image and strive to avoid such situations. Such delays are usually isolated process, operational or human-related problems. In a time of increased investments in technology and artificial intelligence, when systems are talking to each other, complaints like these are bound to be non-existent. Companies consider any feedback as an opportunity to scrutinize all their processes and operations and identify where things go wrong to help them improve and correct the error.
The pension company took up the matter immediately and finalized it quickly. I have no doubt that they have already started to investigate the reasons for the delay. I was pleased to be of help.
After experiencing what I have just described, my friend was thinking of investing his share of the inheritance by making an PPS for his two children again, but questions remained in his mind. In fact, he became a part of the solution by sharing what he experienced. Among the many alternatives available for evaluating our investments and making savings, the PPS is a good option that encourages us to acquire the discipline of regular savings and fits the saying "a drop of water turns into a lake".
Customer Experience management is sensitive and requires a lot of attention. The insurance sector is highly affected by negative experiences. Unfortunately, the "Customer Experience" record of the insurance sector, which makes extraordinary efforts to cover losses in difficult times and invests in technology, training and resources for this purpose, is not very stellar.
What do people face when they take out insurance, when they need it? The story of being insured is one thing, but the claims experience is a completely different story.
“Insurers don't pay claims” is a discourse based on negative experiences. As I have always stated, insurance is a complex and difficult product that is not well recognized, and most of the dissatisfaction stems from ignorance, inadequate counseling and misguidance.
Although the PPS is not an insurance, it is not considered separately from it. As I share regularly on my blog, although it is an institution based on trust, there are many people who express their lack of trust in the sector. This last experience was a perfect example of why I set out to “Explain Insurance and Improve the Experience”.
I am looking forward to you sharing your good or bad insurance experiences. Please share them as comments or messages. For the industry, feedback and turning a negative experience into a positive one is worth gold. Thanks to your feedback and suggestions, the investments, efforts and actions taken to increase the level of satisfaction will find their way faster.
Come, Let's work it out together...
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