MANDATORY ENROLLMENT TO PRIVATE PENSION SYSTEM (MAY 2017)

Mandatory enrollment of the employees to the newly announced mandatory private pension system has come into force as of 01.01.2017 according to the new Communique on Principles and Procedures of Mandatory Enrollment of the Employees via Employers to the Private Pension System. The Communique has been prepared based on Private Pension Savings and Investment System Law, numbered 4632 dated 28.03.2001.   

The aim of the private pension system is mentioned to be providing an additional social security as a complement of the current social security system of Turkey. Enrollment to any private pension system is now become obligatory according to the new legislation. The employees, who meet the criteria in the legislation, shall be enrolled to a private pension system by his employer. The employees, who do not want to carry on, may leave the system if they declare their intent to leave in written.

A “conditional state subsidy” has been foreseen through an additional provision added to the related legislation in order to promote the system. The amount to be granted as the state subsidy is 25% of the corresponding sum paid to the pension account. Employee shall be entitled to get this amount if he stays in the system for the initial mandatory enrollment period determined under regulation.  Employees who are eligible for a pension right or who quits the system due to death or disablement has been foreseen to acquire the whole amount in the state subsidy account. The amount in the state subsidy account shall not be distrained, pledged or added to bankrupt’s assets.

Final Mandatory enrollment Dates for Public Administrations and Private Sector Employees to the system are mentioned as follows:

NUMBER OF EMPLOYEES

FINAL ENROLLMENT DATE FOR THE SYSTEM

Private sector companies with over 1000 employees

01.01.2017

Private sector companies and public entities between 250-999 employees

01.04.2017

Private sector companies between100-249 employees

01.07.2017

Private sector companies, Local Administrations and SEEs (State Economic Enterprises)between 50-99 employees

01.01.2018

Private sector companies with 10-49 employees

01.07.2018

Private sector companies between 5-9 employees

01.01.2019

 

Accordingly Turkish citizens or individuals with blue card who have not completed 45 years of age and employed by the employers other than state shall be enrolled under the new System. Employee’s contribution shall be not less than the amount corresponding to minimum 3% of the premium based earnings. The contribution shall be deducted from employee’s basic salary. Deduction for the year 2017 is minimum 53 TL – 400 TL which is calculated for the min. and max. salary basis. Employee has been enabled to request for the increase of the deduction ratio.

We hope that newly announced mandatory private pension system would increase the standards of the retired workers. However, there is no doubt that the disclosure and the application of the system should be provided to the workers precisely via meetings.