Amending the law on Personal Pension Savings and Investment System Act no. 6740, was promulgated in the Official Gazette 25 August 2016 no. 29812. Arrangement in Law Code No.6740, also refer as “mandatory private pension” in public, regulates under 45 years of age employees’ (public agents and workers) enrolling in private pension system and having a right of withdrawal for a certain period, from the date of January 1, 2017. 1)Scope of Act  In scope of arrangement, under age of 45 years and in Act no.5510 ;

  • In scope of Art. 4/a , work with one or plus employers according to a labor contract and,
  • In scope of Art. 4/b, work at public administration
will benefit from. 2) Calculation method Employee’s contribution amount mentioned in Act was determined as deduction in  3% of their income subject to Premium (The Council of Ministers is entitled to amend this ratio by increasing the ratio to %6 or by decreasing the ratio to 1% or by proposing a fixed limit to the contribution fee). Example, if arrangement was in force for today, for worker that getting paid in lower limit of employee’s income subject to Premium (price floor base on SSK Premium) 1.647,00 X % 3 = 49,41 TRY would be cut back whereas worker that getting paid in upper limit of employee’s income subject to Premium (price ceiling base on SSK Premium) 10.705,50 TRY x %3 = 321,165 TRY would be cut back . Employee may request for deduction in higher fee than specified in retirement agreement according to automatically enrolling. Contributions will be paid in Private pension account in behalf of employee within the arrangement also state subsidy will be provided. Hereunder, Government will provide for once state subsidy for employees, in case of non-usage of withdrawal rights, another state subsidy of 1.000 TRY will be provided for once only. (The Council of Ministers is entitled to amend this fee by increasing it to the half or by decreasing the half of it). Also, in case of using the right of retirement, withdrawing the savings from an account in preference within annual income insurance contract, %5 ratio of minimum ten years of savings will provide as supplementary state subsidy. 3) Employers’ Liability According to the arrangement, financial burden (as contribution by employers) has not been regulated against the employers although there are some  responsibilities as follows; According to this; 
  • Employer is obligated to enroll employees to a pension company’s (Private pension firms, Firms) plan that is approved by the Under Secretariat. 
  • Employer is obligated to transfer the contribution amount to the pension company on the first business day following the employee's salary pay date. If the employer does not transfer or delay, it will be liable for the monetary losses of the employee. 
  • Employers will be inspected as their obligations defined in Act by Ministry of Labor and Social Security. 
  • In case of non-fulfillment of obligations and arrangements, Employers’ will be fined 100 TRY by Ministry of Labor and Social Security for each of every infringement. 
4) Employees’ Rights In arrangement, employees have few rights as right of withdrawal, recess and transferring times taken as a basis in savings and duration. Accordingly,
  • Employee has a right of withdrawal within two months upon receiving notification of his/her participation in the pension plan.
  • In use of withdrawal, paid contributions to the account will paid back in 10-work-day with investment income if there is any.
  • Recession on payment of contributions may requested by the employee whom hadn’t apply to the withdrawal right, under circumstances that determined by Under Secretariat.
  • If the employee changes workplace and the new workplace have a qualifying pension plan as defined under the Act, the employee’s existing incurred pension amount and times taken as a basis in retirement will be transferred to the pension plan of new workplace. If the new workplace does not have a qualifying pension plan as defined under the Act, the employee continue the pension plan provided by previous employer in request; or terminate pension plan in non-request. The employee should notify the company regarding this request, until the end of following month which employee had changed workplace.
 5) Individual Pension Insurance Firm and Liability of the Bank It’s been defined some liabilities for Individual Pension Insurance Firms (“Firm”) and the Banks in arrangement. According to this;
  • Firm will be held responsible for fund management in such a manner that payed contributions not to lose in value during the retraction.
  • Firm will be held responsible for following and collecting procedures of the contributions of Employee’s. (Under secretariat can decide to assign liability of following and collecting procedures to other competent authorities which are established for this purpose.)
  • In this context, Firms will not be able to make any cut backs except fund management fee.
  • Banks, Social Security Institution and other related Public Institutions will transfer the necessary data’s for calculation of Employee contributions and State Subsidy to the Pension Monitoring Center and authorized authority regarding the following and collecting procedures mentioned in this article, according to procedures and principles which are regulated by Under Secretariat.
6) Statement of the Minister: Minister Şimşek has made a statement that the automatic participation related to the special retirement plans determined in the individual pension system (“IPS”) shall begin as of January 1, 2017. Şimşek has also stated that; they often come together with the insurance companies and hold consultations regarding the determination of IPS and the settlement regarding the automatic participation of private and public sector employees is open to signing in the Board of Ministers and continued as follows; “In accordance with the determination’s first stage, as of January 1, 2017, employees working at private companies with more than 1.000 staff and as of April 1, 2017, civil servants working at public companies with staff between 250 and 1.000. Private companies with staff between 100 and 249 shall participate to the system as of July 1, 2017 and local administrations and public economic enterprises shall participate to the system as of January 1, 2018. On the other hand; public companies with staff between 10-49 shall participate to the system as of July 1, 2018 and those with staff between 5-9 as of January 1, 2019. Accordingly, 14 million employees shall be integrated into the system.”