PPS State Subsidy

PPS State Subsidy

State subsidy is the supportive payment the state will make to all private pension participants for the purpose of promoting the private pension system.

What is the percentage of the state subsidy?

As of 2013, you will benefit from state subsidy at the rate of 25% of the amount of the contribution you pay. With state subsidy, you can gain more by paying more contribution. For example, the state will pay a TL50 subsidy when you pay TL200.

Sample chart showing monthly and yearly state subsidy for various monthly contributions:

State Subsidy
Annual State Subsidy
TL150 TL37,5 TL450
TL200 TL50 TL600
TL500 TL125 TL1,500
TL900 TL225 TL2,700

In what account will state subsidy be evaluated?

The state subsidy will be kept in a sub-account linked to the participant's private pension account in the clearing house Takasbank and evaluated in mutual funds to be identified by the Undersecretariat of the Treasury.

Has state subsidy afforded different advantages to those who were already in the system?

An extra advantage has been instated regarding the length of time required for eligibility for state subsidy for those who had already joined the system prior to the state subsidy system's effective date of 1 January 2013 and whose contracts are still in effect as of 1 January 2016.

For once only, the length of time you have spent in the system as of 1 January 2013 will be extended by,

  • 1 year for those participants who stayed in the system longer than 3 years but shorter than or equal to 6 years;
  • 2 years for those participants who stayed in the system longer than 6 years but shorter than or equal to 10 years;
  • 3 years for those participants who stayed in the system longer than 10 years.

Who can benefit from state subsidy?

All citizens of the Republic of Turkey who have completed 18 years of age and are paying contributions to a private pension contract or an individual pension contract under a collective pension contract may benefit from state subsidy regardless of whether they are taxpayers or not.

I'm paying contributions on behalf of my spouse and children. Can my spouse and children receive state subsidy?

To benefit from state subsidy, a participant is not required to be paying their own contributions. State subsidy is incurred for the contributions paid into an individual or collective private pension contract regardless of who the paying party is; and paid to the participant's pension account by the state. Thus, your spouse and children may benefit from state subsidy individually.

What are the limits to state subsidy?

The total annual amount of state subsidy for all of the contracts you hold may not be greater than 25% of the gross annual minimum wage. In the case of multiple contracts, the state subsidy will be calculated by taking into consideration the weights of the contributions paid under each contract and the total amount of state subsidy will be divided among these contracts.

How long will it take to gain eligibility for state subsidy?

A stepped arrangement will be applied to eligibility for state subsidy as of 1 January 2013.

  • People who have stayed in the system for a minimum of 3 years will be eligible for 15% of the state subsidy and its gains;
  • People who have stayed in the system for a minimum of 6 years for 35%;
  • People who have stayed in the system for a minimum of 10 years for 60%;
  • People who completed 56 years of age after staying in the system for 10 years and people who leave the system because of death/disability will be eligible for the entire amount of the state subsidy including its gains.

Are there any exceptions to state subsidy?

The law does introduce an exception regarding benefiting from state subsidy: A participant who was in the Private Pension System as of 29 May 2012 may not benefit from state subsidy until 31 December 2014 if they terminate their pension contract by recovering their savings between the dates of 29 June 2012 and 29 June 2014.

When am I going to see my state subsidy in my account?

The state subsidy will be transferred to your pension account within 3 months as of the date you paid your contribution.