Withdrawal from Private Pension may be Made Difficult

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The main target of the Private Pension System is to improve the welfare level of employees by providing a supplementary income during retirement and also to increase the domestic savings which is crucial for Turkey’s economic growth. However, according to official statistics about 57% of the participants used their right of withdrawal from the system in July.

 

Auto-enrolment Private Pension System has been introduced by Law No. 6740 and entered into force as of 1st January 2017. Until then workplaces gradually started to enter into contracts with pension companies and offer pension plans to the employees in the scope of Law on different dates, depended on their number of employees.

Turkish citizen employees who are under the 45 years of age and working against wage under a service contract (in the scope of Law No. 5510, articles 4/a, and 4/c) will be automatically enrolled in a pension plan arranged by employers. Participant employees may have the right of withdrawal from the system within two months.

Withdrawal from the Private Pension Plan

Participant employees may get out of the system within 2 months; and their contribution will be refunded.

• After the auto enrolment, employee will be notified by post or e mail.
• Employee may withdraw from the system within two months as of the date they informed about being included in pension plan by notifying the employer or insurance company through post or e mail. Employee may withdraw even after two months.
• Employee’s contribution will be refunded together with any investment gains within ten workdays after the claim of withdrawal is received.

Can Employees be forced for re-enrollment?

As per the new Regulation;

Employees who get out of system may be re-enrolled in the system in every two years. Undersecretariat of Treasury is authorized to shorten this period down to one year or to extend up to 3 years.

According to news taken place in the media, Undersecretariat of Treasury may take a step to shorten this period in order to prevent high rate of withdrawals.