Steer · Captive demand
Minimum government-bond shares for pension funds and insurers
- What it is
- Investment rules that require private pension funds, subsidised retirement accounts or insurance companies to hold at least a set share of their portfolios in government debt (as opposed to prudential ceilings on riskier assets).
- Why it counts
- Long-term household savings held by pension and insurance intermediaries are locked into sovereign paper, creating a price-insensitive domestic investor base that holds yields down.
When it was in force
- Turkey: 2022 → now, in force; the rule may be older than the cited document
- Turkey: 2023 → now, in force; the rule may be older than the cited document
- India: 2024 → now, in force; the rule may be older than the cited document
3 examples
Turkey
2022 → nowIn forceThe rule may be older than the cited document · As cited: 2022-present (minimum cut from 70% to 50% by amendment of 14 February 2023)
State matching contributions in the private pension system (BES) must be placed in dedicated funds investing at least 70% (50% after February 2023) in lira debt instruments issued by the Treasury/Ministry or its asset-leasing companies.
Turkey today: index 50.7Bireysel Emeklilik Sisteminde Devlet Katkısı Hakkında Yönetmelik (Resmî Gazete 31/12/2022, No. 32060, 5th repeat), Article 14(1)(a); amended by Regulation in Resmî Gazete 14/02/2023, No. 32104Primary source
“Asgari yüzde yetmişi, ilgisine göre Bakanlıkça veya Hazine Müsteşarlığı Varlık Kiralama Şirketlerince ihraç edilen Türk Lirası cinsinden borçlanma araçlarında, gelir ortaklığı senetlerinde veya kira sertifikalarında”
Turkey
2023 → nowIn forceThe rule may be older than the cited document
The amendment replaced 'seventy' with 'fifty' in Article 14(1)(a), lowering but keeping the mandatory public-debt floor for state-contribution funds.
Turkey today: index 50.7Regulation amending the State Contribution Regulation, Resmî Gazete 14/02/2023, No. 32104, Article 1Primary source
“Devlet Katkısı Hakkında Yönetmeliğin 14 üncü maddesinin birinci fıkrasının (a) bendinde yer alan “yetmişi” ibaresi “ellisi” şeklinde”
India
2024 → nowIn forceThe rule may be older than the cited document · As cited: 2024-present (requirement stems from Insurance Act, 1938, ss. 27A-27B)
Life insurers must hold at least 50%, and general insurers at least 30%, of the relevant funds in approved securities, which include Government of India securities.
India today: index 60.6IRDAI Master Circular on Actuarial, Finance and Investment Functions of Insurers, Ref. IRDAI/ACTL/CIR/MISC/80/05/2024 of 17 May 2024, para 4.11 (restating Insurance Act, 1938, ss. 27A and 27B)Secondary source
“The Act further requires a Life Insurer to hold not less than 50% and a General Insurer to hold a minimum of 30% in Approved Securities, which includes investment in Government of India Securities.”
Examples and their dates reviewed .
More captive demand
Further reading
- The Coming Great Repression? New Measures and a Century of Evidence
- The Sovereign-Bank Nexus in Emerging Markets and Developing Economies: Trends, Determinants, and Macrofinancial Implications
- Financial engineering is no substitute for interest rates: Lessons from Türkiye
- ‘Muddling through or tunnelling through?’ UK monetary and fiscal exceptionalism and the Great Inflation
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