Turkey’s New Private Pension System Is On The Way


Voluntary private pension system is about to be replaced by a mandatory private pension scheme, which stipulates that, every wage-earner Turkish citizens under 45 years of age will be automatically enrolled in a pension plan determined by employers.

A long-awaited “Draft Amending the Law on Individual Pension Savings and Investment System” which is being discussed in Parliament’s Plan and Budget Commission and expected to be in force soon, aims to improve the welfare level of employees by providing a supplementary income during retirement, and to increase the domestic savings crucial for preventing the fragility of Turkish economy.


Every Turkish citizen working against wage (who are employed by one or more employer through a service contract, and public sector employees) under 45 years of age will be included  in a pension plan through a pension contract arranged by employer in line with the provisions of the law.  The pension company that the employer may choose must be amongst the one approved by the Undersecretariat of Treasury.


Participants’ contribution amount will be 3% of their earning subject to premium. It is about 40.00 TRY monthly for minimum wage earners, and 321.00 TRY for maximum SSI base. Council of Ministers is authorized to double the contribution rate or lower to 1%, or determine it to a fixed amount.
Employee may require employer to deduct more than the amount determined in pension contract.
The deducted amount should be transferred to pension company at the day following the wage payment day of employee at the latest. Otherwise employee will be responsible of any loss on employee’s saving.


Participant employees may get out of the system within 2 months as of the date they informed about being included in pension plan. In this case the accumulated amount of contributions and investment income, if any, will be refunded within 10 days.

Employee who doesn’t use his/her right of withdrawal may require suspension of contribution payments, in certain circumstances.


Government will provide state subsidy for employees, amounting to 25% of employees’ paid contributions to private pension account. In case the employee stays in the plan, another state subsidy of 1.000.00 TRY will be provided for once only.


In the event of workplace change, employee’s accumulated savings and retirement time basis gained in the system will be transferred to pension contract of the new workplace, if the new workplace has a pension plan. Otherwise employee, if he/she requests, may continue to pay contribution to the contract arranged in previous workplace; if he/she doesn’t wishes to continue, the pension contract will be terminated.


In the event of retirement, if the participant prefers to be paid in the scope of an annuity contract (at least ten years), he will be paid 5% of his accumulated savings as state subsidy.


Responsibility of observing and collecting the employee’s contribution will belong to pension company.

No deduction, apart from fund management fee, can be made by the company.

In case of employers’ noncompliance with the arrangements in force, 100.00 TRY administrative fines will be imposed by Ministry of Labor and Social Security.


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