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Frequently Asked Questions

When will the Auto-Enrollment enter into force?

The Auto-Enrollment implementation subject to gradual transition by taking into consideration the number of employees of the workplace of the employees entered into force on 01.01.2017

Coverage Dates for Public Administrations and Private Sector Employees:

Private sector companies with over 1000 employees 01 January 2017
Private sector companies and public entities with 250-999 employees (general and special budgeted administrations) 01 April 2017
Private sector companies with 100-249 employees 01 July 2017
Private sector companies, Local administrations and SEEs (State Economic Enterprises) with 50-99 employees 01 January 2018
Private sector companies with 10-49 employees 01 July 2018
Private sector companies with 5-9 employees January 2019
Which employee shall be included within the scope?
  • The Turkish citizens or persons having the blue card
  • The persons who have not completed the age of 45
  • Public sector employees (4c)
  • Private sector employees (4a) (will be included taking into account the number of employees at work identified by the Council of Ministers' Decision)
  • Employees covered by 4b are not included in the system.
How will employees be involved in the Auto-Enrollment system?

Every employer involved in the Auto-Enrollment system is obliged to contract with a pension company on behalf of its employees and to include employees who meet the criteria in the legislation.

To allow their employees to be included in the system, the employer shall report all necessary information to the pension company and forward this monthly data to the pension company. The employer shall deduct from the salaries of the employees a minimum 3% of premium based earnings or monthly pension deduction based payment and this amount shall be transferred to the pension company no later than the following business day after the date of the employee's salary paid.

Can employees leave the Auto-Enrollment system?

The business day following the date on which the first contribution payment deducted from the employee contribution is transferred to the pension company's account in cash, it will be reported to the employee by the pension company that the employee has been included in the automatic participation. The employee will be entitled to withdraw (exit) within 2 months following the date of this notification. In this case, contributions paid by the employee until that date, if any, will be returned to the employee's investment income. If the employee desires to leave the system after the end of the withdrawal term, the leaving rules in the private pension system will be effective. Please click for detailed information regarding the exit rules comprised in the Private Pension System which are determined by the Undersecretariat of Treasury.

Can the employee go back to the system any time after withdrawal/leaving?

If an employee exits from the system he/she cannot reenter the system at his own request.

However, employees who continue to work in the same workplace and meet the conditions will be included in the system again under the procedures determined by the Undersecretariat.

When should the employers include the employee into the system again after he/she withdraws / leaves ?
  • Employees who are separated from the Auto-Enrollment pension plan and affiliated to a workplace are automatically reincluded into the system by their employer, provided they are still working for the company and have not completed the age of 45 years.
  • The Pension Monitoring Center (PMC) identifies those who have left the retirement plan of a workplace in the previous calendar year and still continue to work in the same workplace and who will not complete the age of forty-five by the end of the following April and reports to the pension company within one month. The pension company informs the relevant employers of their employees identified until the end of the month following the PMC notification, so that they can be reincluded into the system. Employers include their employees in the system until the end of the second month following the notification.
How much will be the payments (contribution amounts) to be executed by the employee?

Employee contribution shall be the amount corresponding to minimum 3% of the premium based earnings or monthly pension deduction based payment. Employees should inform their employer if they wish to pay higher than this amount.

What are the State Subsidys for employees?
  • State Subsidy provided at the rate of 25% of the employee contribution
  • If they prefer to stay in the system at the end of the 2 month withdrawal term, the initial State Subsidy at amount of 1,000 TL.
  • Additional State Subsidy up to 5% of the saving od the employees who prefer to receive their savings in the retirement period as 10 year annual income insurance
What are the factors to be considered in the calculation of the initial State Subsidy?

The Initial State Subsidy is calculated automatically in the month following the end of the withdrawal term, for only once during the entry into the system as part of automatic participation. The initial State Subsidy of an employee who has more than one contract with withdrawal term expired is calculated by taking into account the weight of contributions paid per contract in the month that withdrawal term ended, and is shared among the employee's contracts. In the event of a cancellation any of these contracts, promised initial State Subsidy for this contract is distributed to the remaining contracts. If there is more than one contract to be distributed, the weight of the contributions paid per contract in the month in which the initial distribution and the end of the withdrawal term will constitute the basis.

If the employee who has left the system cancelling all contracts is included in the system again, the initial State Subsidy will not be recalculated.

Would the State Subsidy limit applied to a participant, who has the Private Pension System contract outside the scope of automatic participation, be still valid for these contracts as well?

The upper limit of State Subsidy in the contracts within the scope of Auto-Enrollment shall be calculated separately from the State Subsidy limit of Private Pension System contracts.

Is there a vesting period for State Subsidy that will be offered under automatic participation?

State Subsidy incentive at 25% and 1,000 TL initial State Subsidy incentive have same vesting period which is announced on the table below. (Same as the periods and rates in the PPS system).

The number of completed year in the system State Subsidy vesting rate
Up to 3 years %0
from 3 years to 6 years %15
from 6 years to 10 years %35
10 years and more %60
Retirement, death, disability %100
How much will be the deductions for Auto-Enrollment contracts?

While they are included in the system, no entrance fee shall be collected from the employees and in the case where the employees exit from the system, the deferred entrance fee/amount shall not be collected from them. As long as they are participated in the system, no deduction is made by pension companies other than the Fund Operation Expenses Fee (FOEF) in terms of the savings of the employees in the pension account. The maximum annual fund operation expenses fee rate (FOEF) is applied as 0.85% for all funds offered to employees who are included in the private pension system through their employers under automatic participation. In accordance with the legislation, the Fund Total Fee (FTF), including the FOEF, in pension mutual funds offered under Auto-Enrollment can not exceed maximum 1.09% per year.

If the employees do not choose any fund in the course of entrance to the Auto-Enrollment system, in which funds will the contributions be invested?

When they first participate in the system, making a fund selection between the interest bearing or interest-free funds shall be requested from the employees. In the case where the employee does not make a fund selection, the fund notified by the employer shall be valid. In this context, the contributions are firstly directed to “Initial Funds" stated in the plan in accordance with the preference made. Provided that the result of the survey shall not be binding, the risk profile survey shall be submitted to the employees who prefers to exit the system subsequent to completion of the establishment of the Fund. Contributions and saving are directed to investment through funds / fund groups at different risk profiles presented in the preference of participant. The savings of the employees who have completed his/her first year and whose funds preferences are not stated in their Auto-Enrollment certificates, shall be invested in the standard fund pursuant to the same preference in the case where no changes arise in terms of their fund preferences with regard to the “interest bearing” and “interest-free” funds at the outset.

Are there any limitations with respect to the fund distribution changes to be conducted by the employees?
Employees can change their fund distributions 6 times in a year.
Can employees choose the pension company they desire?

No. This choice must be executed by their employers on behalf of them. Employers may make a contract with a pension company approved by the Undersecretary of the Treasury on behalf of their employees.

If the employee works with more than one employer, will each employer be included in the Auto-Enrollment system?

The employee will have an Auto-Enrollment contract with each employer who is included in automatic participation.

To whom will the notifications be made if the employee leaves the job?

In the case of separation from the employee's work, he/she will execute all his/her transactions directly with the pension company.

When an employee changes his/her job, what method will be followed if there is a retirement plan under Auto-Enrollment in the new workplace?

Savings of an employee in his/her private pension account who has an Auto-Enrollment contract as of his/her job change date and his/her paid State Subsidy amount if available can be transferred to the plan which is available in the new workplace in accordance with his/her request if a group pension plan which is presented to the employees in the new workplace is available. The period which constitutes the basis in terms of the pension and State Subsidy entitlement of the employee within the context of the system shall exactly be maintained in the plan within the new workplace.

Can the current pension plan continue when the employee changes jobs if he or she is unemployed or there is no pension plan under Auto-Enrollment at the new workplace?

When the employee changes his/her job, if his/her new employer does not have a pension plan for Auto-Enrollment or if the working relationship of the person has ended, he/she can continue the existing pension plan. In this case, he/she makes the payments himself/herself (through credit card, bank account etc.) to the pension company with which Auto-Enrollment contract is executed.

In the case where the employee requests to continue to pay the contribution, he/she can suspend the payment for maximum 3 months or execute an exit transaction. The employee is obliged to notify to the pension company of his request to discontinue to pay contribution, of workplace change/leaving work until the end of the following month in written or via any types of electronic communication. In the case where the relevant request is not communicated, the employee shall make a notification in writing or by means of the electronic communication instruments regarding that he/she will execute the exit transactions with respect to the contract.

If the employer changes his/her workplace and in the new workplace there is not any pension plan provided or the employment of the person is terminated, in the scope of the pension plan he was included in his previous workplace he/she can stay in the system by paying a contribution share at 3% of the minimum monthly gross salary applied in the first six months of the relevant calendar year.

Will the employees, who have contracts in the Private Pension System apart from the automatic participation, be included in the Auto-Enrollment ?

Yes, all employees who are comprised within the scope of the Auto-Enrollment system shall be included in the system even if they have existing private pension contracts.

Can employees continue the Auto-Enrollment system with the PPS contract not covering automatic participation?

No, new contract will be commenced with automatic participation. Existing PPS contracts will continue separately.

Can the vesting periods for pension and State Subsidy obtained in the scope of Auto-Enrollment be joined to the vesting periods of pension and State Subsidy obtained in the scope of other Private Pension System contracts?

The periods which constitute the basis for the pension and State Subsidy and other rights and obligations under Auto-Enrollment can not be consolidated with the PPS contracts within the scope of automatic participation.

How do the employees qualify for the pension?

Employees who have at least 10 years in the Auto-Enrollment system and who complete 56 years of age qualify for the pension.

Which incentives do employees using their pension right benefit from?

Employees who leave the system using the right of pension benefit from the following incentives:

  1. State Subsidy at 25% regularly paid to their account
  2. 1,000 TL State Subsidy during the entrance to the system
  3. In case of using the pension right, the additional State Subsidy at the amount of 5% of the saving given to the employee who prefers to have the savings in his/her pension account under the annual income insurance contract for at least ten years
How can the employees receive their savings?

Employees can receive their savings by means of 3 methods:

  1. Lump Sum
  2. Scheduled Back Payment: They shall receive pension at an amount determined by their own discretion and the payments shall continue until their savings are consumed.
  3. Annual Annuity Insurance*: The employee shall receive it in the form of a life-long pension.

*Employees using this preference can benefit from additional State Subsidy incentives up to 5% of their savings.

All questions and answers stated in this text have been drafted within the framework of the Law numbered 6740 Amending the Private Pension Savings and Investment System Law which amends the Private Pension Savings and Investment System Law numbered 4632 and by taking into consideration the Private Pension System Regulation, the Private Pension System Circular and the relevant circulars. Within the context of the legislative amendments with regard to the Private Pension System or within the scope of the secondary legislation to be published recently, the methods which are different from the information provided in this text may be stipulated by the publication of the circulars.