Application of Private Pension System Deductions
By virtue of the advantages of the new period of the Private Pension System, the savings which are required by you for your retirement dreams is much more closer to you...
As from 1 January 2016, a more advantageous period begins for the participants of the Private Pension System. In the new period, the participants can make more profits so long as they stay in the system.
- The state contribution at the rate of 25% continues. With regard to each 100 TL which is deposited to the pension account, 25 TL state contribution amount shall be received. For instance, in the case where 200 TL contribution amount is deposited per month, your savings amount shall be 250 TL along with the state contribution.
- The deductions which are made from the pension contracts have changed.
In the current situation, there are different deduction items in terms of the private pension contracts. The most known ones of these deductions are the entrance fee and the administrative expenses fee.
In the current situation, the entrance fee is collected as advance payment in the manner which this amount constitutes 10% of the minimum wage which is applicable for the year on which the entry to the system is executed and the remaining amount is collected at the rates which vary as per the years. (0-3 years: 75%, 3-6 years: 50%, 6-10 years: 25%, 10 and more years: 0%) Meanwhile, the administrative expenses fee is applied at the rate of 2% of the contribution amount which is paid by the participant.
In addition to these deductions, the Fund Total Fee which varies according to the fund groups in the system and the suspension deduction which is collected as 2 TL for each month in case of non-payment for 3 consecutive months, are also applied. Furthermore, the application of the fixed deduction which is paid to the Settlement and Custody Bank and the Pension Monitoring Center is available despite the fact that it is not performed by AgeSA although it is existent in the system.
The changes which are made within the scope of the new regulation that entered into force as of 1 January 2016 covers both the current contracts and new contracts to be sold.
- Only in the first 5 years of the contracts, the administrative expenses fee and entrance fee can be collected.This amount corresponds to 8.5% of the monthly gross minimum wage for each year (the gross minimum wage which is applicable in the relevant calendar year).
- Meanwhile, the fund total fee is not comprised within the scope of the deductions to be made with respect to the first 5 years. The fund total fee is collected during the period in which the contract is in force.
- The deduction controls will be commenced to be executed as of the 6 th year of the contracts. One of these deduction controls is the control which is associated with the state contribution to be made in the case where the contract expires. (The total amount of deductions which will be made as from the effective date of the contract until the expiration date of the contract shall not exceed the amount which will be calculated by using the rates which are stated in the regulation in terms of the amount which is available in the State contribution account within the scope of the contract on the expiration date of the contract. These rates shall be 60% with respect to a contract in its 6th year, 70% with respect to a contract in its 7th year, 80% for a contract in its 8th year, 90% for a contract in its 9th year and 100% for a contract in its 10th year and above. With regard to the execution of this control, the relevant application shall be commenced as of 01.01.2021.)
- Furthermore, the refunds with respect to the fund total fee shall be executed as of the 6th year of the contracts. (Detailed Information: In terms of the fund total fee, the refund rate shall be 2.5% for the 6 th year and the rates between the 7th and 14th years shall be applied by increasing the refund rate which is applicable in the previous year by 2.5% for each year. While determining the refund rate, all periods which continue within the contract as from 01/01/2013 shall be taken into consideration. With respect to the part below 1.1% of the savings amount which is available as of the calculation date of the deduction, refund shall not be applied.
- The refund shall be executed on the basis of contract and by taking as a basis the anniversaries of the contracts. The refund shall be made in the case where the contract is terminated (by means of transfer to another company or exit from the system) subsequent to 01.01.2021 and in any case, at the end of each contract year subsequent to the mentioned date and within this scope, the fund total fee deductions which were executed prior to the mentioned date shall not be refunded within this scope.)
You will be more profitable so long as you stay for longer periods within the system. In the case where you leave your contract within the first 5 years, the defined deductions shall be executed in your plan. However, in the case where you leave your contract subsequent to the 5 th year, both the Fund Total Fee refunds shall be commenced and the deduction controls regarding the State Contribution shall be executed. For the reason that you will be entitled to the refunds according to these controls, you will be profitable.
You can have access to your company information any time you wish by means of the online transactions menu in the internet branch of agesa.com.tr. Furthermore, the deduction information are also available in the Account Statements which are sent by mail and e-mail.
- PPS: Private Pension System
- Pursuant to the “Circular dated 30 November 2015 (2015/50)” which was published by the Undersecretariat of Treasury, in the case where the contribution amounts which were not paid on the due dates with respect to these contributions are not paid within three months as from the payment day of the relevant contribution amount, it shall be regarded within the framework of the relevant contract that the payments are made in irregular form. The controls to be made with respect to the State Contribution at the time of your exit from the contract shall not be conducted in the case where your contract is in the irregular payment status.
- The annual contribution amount which will be paid by the state to a participant shall be limited with 25% of the annual gross minimum wage amount. Even in the case where the participant has more than one pension contracts, the annual state contribution amount to be paid shall not exceed 25% of the annual gross minimum wage. Persons who are not the citizens of the Republic of Turkey will not be able to benefit from the state contribution.
- The participants who have terminated their pension contracts by receiving their savings within two years despite the fact that they were existent in the Private Pension System as of 29 May 2012 will not be able to benefit from the state contribution in the case where they are included in the system once again or they will not be able to benefit from the state contribution until 31 December 2014 with regard to other pension contracts which are available in the system.
- State Contribution is for individual contributors. In terms of the employer contributed pension contracts, the state contribution shall not be paid with regard to the contribution amount of the employer. Apart from the employer contribution, if someone else is paying for the participant, state contribution shall be deposited to the account of the participant.
- The money market funds of AgeSA are: AgeSA Hayat ve Emeklilik Money Market First Liquid Flexible Pension Mutual Fund, AgeSA Hayat ve Emeklilik Second Liquid Flexible Pension Mutual Fund and AgeSA Hayat ve Emeklilik Income Purposes Flexible Pension Mutual Fund. The public funds of AgeSA are: AgeSA Hayat ve Emeklilik Public Debt Instruments Mutual Fund, AgeSA Hayat ve Emeklilik Income Purposes Public Debt Instruments Pension Mutual Fund, AgeSA Hayat ve Emeklilik Public Debt Instruments Pension Mutual Fund-Group, AgeSA Hayat ve Emeklilik Foreign Public Debt Instruments Pension Mutual Fund and AgeSA Hayat ve Emeklilik Income Purposes Foreign Public Debt Instruments Pension Mutual Fund. The international debt instruments fund of AgeSA is AgeSA Hayat ve Emeklilik Income Purposes International Debt Instruments Pension Mutual Fund. The balanced fund of AgeSA is AgeSA Hayat ve Emeklilik Balanced Pension Mutual Fund. The stock funds of AgeSA are: AgeSA Hayat ve Emeklilik Growth Stock Group Pension Mutual Fund, AgeSA Hayat ve Emeklilik Stock Pension Mutual Fund and AgeSA Hayat ve Emeklilik Growth Stock Pension Mutual Fund. The flexible funds of AgeSA are: AgeSA Hayat ve Emeklilik Growth Flexible Pension Mutual Fund, AgeSA Hayat ve Emeklilik Growth Flexible Group Pension Mutual Fund, AgeSA Hayat ve Emeklilik Flexible Pension Mutual Fund and AgeSA Hayat ve Emeklilik Growth Performance Flexible Pension Mutual Fund. The international composite fund of AgeSA is AgeSA Hayat ve Emeklilik First Flexible Pension Mutual Fund and AgeSA Hayat ve Emeklilik Second Flexible Pension Mutual Fund. The standard fund of AgeSA is AgeSA Hayat ve Emeklilik Standard Pension Mutual Fund. The gold fund of AgeSA is AgeSA Hayat ve Emeklilik Gold Pension Mutual Fund.