Life cycle analysis of savings accounts with matching contributions

Okan Eren, Şerife Genç İleri*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)


In this study, we examined the macroeconomic effects and welfare implications of the new voluntary saving accounts enacted in Turkey. The most salient features of these accounts include tax advantages, government matching contributions, and the fees levied on returns and contributions. Using an overlapping generations model, we demonstrated that the new saving accounts with no fees eventually raise the capital stock by 29.7% and the net saving rate by 0.50 percentage points. Our long-run analysis yielded two other noteworthy results. First, matching contributions generate stronger saving incentives than the tax advantages. Second, the fees implemented on these accounts curtail higher contributions and hence should be eliminated. The transition analysis revealed that the low- and medium-income young individuals benefit the most during the implementation phase of the plan. In contrast, the old-age high-income group incurred a loss. Hence, a government, with long-run commitment to the current system, can achieve a substantial increase in the capital stock and promote the well-being of the least advantaged group, that is, young and low-income individuals in the economy.

Original languageEnglish
Article number106028
JournalEconomic Modelling
Publication statusPublished - Nov 2022
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2022 Elsevier B.V.


  • Fiscal policy
  • Household saving
  • Individual retirement accounts
  • Matching contributions
  • Saving incentives


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