FAQ On Turkish Private Pension System


As of 1 January 2017 every wage-earner Turkish citizen under 45 years of age will be automatically enrolled in a pension plan arranged by employers as per the Law No. 6740, “Amending the Law on Individual Pension Savings and Investment System,” which has been issued in Official Gazette dated 25 August 2016, and will enter into force on 1 January 2017.

What is private pension system?

Private pension system, also called “Individual Retirement Scheme” is intended to be complementary to the mandatory state social security scheme, and to improve the welfare level of employees by providing a supplementary income during retirement.
It is also expected to increase the domestic savings, which is crucial for Turkish economy.

Scope of private pension system?

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 automatically included in a pension plan.

Who determines the pension company?

A pension contract will be arranged by employer in line with the provisions of the law.

Employer may choose one of the pension company approved by the Undersecretariat of Treasury.

What will be the amount of contributions?

Participants’ minimum contribution amount will be 3% of their earning subject to premium. It is 49.41 TRY monthly for minimum wage earners, and 321.17 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.

Is it possible to contribute more?

Yes. Employee may require to contribute more than the amount determined in the pension contract.

When to transfer the deductions?

Employer must deduct the contribution and transfer 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.

Is there any State contribution?

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.

Can employee withdraw from the pension contract?

Participant employee 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.

Are foreigners obliged to participate in a pension plan?

No. Foreigners are out of the scope of mandatory private pension system.

What will happen in case of workplace change?

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.

When and how the participants will qualify for annuity?

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.

What will be the responsibility of pension company?

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 pension 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.

What about current private pension savings?

The savings in the current voluntary private pension cannot be transferred to mandatory pension plans.

All employees under 45 years of age will be automatically enrolled in new arranged pension plan as of 1 January 2017, whether they are participated in current system or not.  

Employees enrolled in the current system may either chose to continue to participate in both system or may withdraw their savings from the current one.


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