Private Pension System

What Is Private Pension System

Private Pension System (PPS) is referred to as a voluntary pension system which is intended to invest in various funds your regular savings that you contribute to the system during your working years and to use your accumulated savings and the yields from such investments to help you maintain your current standard of living during your retirement years as well.

PPS in Turkey is a complementary one to the current mandatory social security system and it is supported by state contribution.

In order to become entitled to pension benefits in this system, you must 10 years, starting from the date you take out your plan, and be completed the age of at least 56.

What Are The Benefits of PPS?

Comfortable Life After Retirement

Do you think the pension you will be paid by the Social Security Institution will be enough for you to maintain your current standard of living during your retirement? PPS was founded serve as a complementary private pension model to the mandatory social security system, and the goal of this system is to provide you with supplementary income during your retirement years and help you maintain your standard of living.

Reliability

All the elements of the system are fully controlled. The operations of your pension company and those of pension funds and their managers are audited and supervised by the Undersecretariat of Treasury and the Capital Market Board, respectively, at least once a year. In addition, your pension company is legally required to be audited by an independent audit firm at least once a year, while the accounts and transactions of pension funds are legally subject to independent audit on a quarterly basis. The day-to-day operations of pension companies are also monitored by the Pension Monitoring Centre (PMC) in an electronic environment.

Transparency

Your personal pension accounts are held in safe custody by Takasbank (Settlement and Custody Bank Inc.). Through these accounts, you can track your shares in various funds.

Tax Advantage

Proceeds from pension investment funds are exempt from withholding tax.

State Contribution

The amount corresponding to 25% of the contributions paid in your name, excluding those paid by your employer, shall be followed-up apart from your accounts as state contribution. The limitation of state contribution amount is the portion out of the sum of contributions paid in a calendar year, which is taken as basis for calculation of state contribution. This corresponds to the total amount accrued during the calculation period for the minimum wage applicable on the date when the calculation period for the relevant calendar year ends.

Right to Participate in Decision-making Processes Affecting Your Pension Benefits

Within the framework of your pension plan, you have the right to select the funds in which to invest your savings and change them for a maximum of 6 times per contract year, depending on the level of risk you are willing to take.

Access to Services Offered by Licensed Private Pension Intermediaries

The private pension system is promoted and offered for sale only by private pension intermediaries who possess the legally required professional qualifications and have passed the required licensing test.

Right to Suspend Contributions

If your financial condition deteriorates any time during your plan years, you may suspend your pension account.

Right to Transfer Pension Account to Another Pension Company

If your contract is executed with our company, the contract is required to be retained by us for min. 2 years following the contract enforcement date for entitlement to be transferred to another pension company.

If your contract is drawn up through transfer from another pension company, this retainment period is min. 1 year to be re-transferred.

Tax Advantage

You are entitled to take advantage of certain tax benefits on contributions, the proceeds of your pension fund and even when leaving the pension system.

Tax Advantage on Your Pension Savings Invested

Pension investment funds are exempt from both corporate income tax and withholding tax.

Tax Advantage on Pension Withdrawal

Participants who withdraw from the system remained in the system less than 10 years, 15% of withdrawal tax deduction shall be applied to the income amount. This is calculated by subtracting the contributions paid and the state contribution accrued (Without deducting deferred entry fees, if any) from the total savings amount paid. Including the accrued state contribution and income amounts; and 10% of withdrawal tax deduction shall be applied to the income amount for participants remained in the system at least 10 years but withdrawn from the system before being entitled for retirement.

For participants who become entitled for retirement from the system and for those who withdraw due to compelling reasons, such as death, disability or liquidation, no taxes shall be applied except 5% withdrawal deduction.

State Contribution

State contribution, which is the amount corresponding to 25% of the contributions paid in participants' name, excluding those paid by participants' employers, shall be followed-up apart from participants' accounts and shall be guided to be invested in instruments specified by the Undersecretariat of Treasury.

Total of contributions paid within a calendar year for a participant and forming the basis for calculation of state contribution amount can not exceed the total gross minimum wage amount applicable to the relevant calendar year.

Participants shall be entitled to receive the following amounts subject to following conditions:

Participants entitled for retirement from the system and those withdrawn due to death or disability shall be entitled for the entire state contribution amount and the total yields. Amounts of state contribution and yields for which the participant has become entitled shall be paid in case participant retires of withdraws from the system.

State contribution amounts and yields can not be seized, put in pledge or included in bankruptcy estate.

No state contribution shall be paid for the contributions to be paid until 31.12.2014 by participants who exist within the system on 29.05.2012 and cease their contracts within 2 years after 29.06.2012 by collecting their savings.

Following periods shall be added on date 01.01.2016 as a one time application; the total period spent within the as of 01.01.2013 (and to be considered during the period where participant is entitled for state contribution) by participants who have participated before 01.01.2013. Provided that existence within the system between 01.01.2013 - 01.01.2016 shall be uninterrupted: