What is the Private Pension System?
The Private Pension System is a special system that allows you to safely save for your retirement and turn these savings into investments. It allows you to receive the savings you have obtained through your investments, either as a lump sum or as a pension.
The Private Pension System is a special system that allows you to safely save for your retirement and turn these savings into investments. It allows you to receive the savings you have obtained through your investments, either as a lump sum or as a pension.
It is supported by the state through tax advantages and state subsidies. It is a complementary system to the social security system. Participation in this system is optional, unlike social security organizations.
The Basic Elements of the Private Pension System
Pension Company: It is a company established in accordance with the Private Pension Savings and Investment System Law and licensed to operate in the pension branch in accordance with this law.
Participant: According to the pension agreement, a real person with legal capacity to act an individual pension account with the company for its name and account.
Private Pension Broker: It is the person who mediates the pension agreement of pension companies or makes them on behalf of the company.
Private Pension Agreement: The pension agreement is the agreement that regulates the principles and procedures regarding the opening of an individual pension account with the company, the payment of contributions to the account, the investment of the paid contributions in preferred funds, the payment of the money saved in the account to the beneficiaries, and the other rights and obligations of the parties within this scope. The pension agreement may be made as an individual or group pension agreement. The group pension agreement is drawn up individually or as an employer group pension agreement
Pension Investment Fund: It is an investment vehicle established by the pension company within the scope of the law and managed by portfolio management companies, where the contributions made by participants to the system are evaluated.
Portfolio Manager: It is a portfolio management company deemed appropriate by the Capital Markets Board, where pension companies that have received a certificate of authorization from the Capital Markets Board have entered into an agreement to manage their pension funds.
Custodial:It is the custodial institution where the assets in the fund portfolio are stored, which is deemed appropriate by the Capital Markets Board.
Contribution Share: It is the amount paid to the company according to the pension agreement, excluding entrance fees, for savings.
Saving: It is the total amount available in the participant's individual retirement account, excluding state subsidy and returns.
State subsidy: State subsidy is the amount paid by the state to the participant's private pension account in accordance with the Additional Article 1 of the Law No. 4632.
Access to the System and Rights
Participation to the Private Pension System
Persons who have the capacity to act can be included in the Private Pension System. If the pension agreement is not rejected by the company, it enters into force on the date the first payment made as contribution is transferred to the company accounts in cash, following the completion of the blockage period, if any. If the offer is rejected by the company, the payment instructions given will be canceled and all payments, if any, will be returned to the payer within five business days without any deductions.
In the Private Pension System, you have the right to withdraw before your pension agreement comes into force. In case of withdrawal, you must notify our company by calling our company's call center or by letter, fax or secure electronic signature.
You have the right to withdraw within sixty days after signing the offer form or approving the offer. After the withdrawal notification is received by the company, the payment instructions given are canceled and all payments made are returned to the payer within ten working days without any deductions except for the fund total expense deduction, together with the investment income, if any.
What are the rights granted?
a) Exercise of Rights
In the private pension agreement and the group-related private pension agreement, the contractual rights are used by the participant as a rule. In these agreements, it may be decided to use the rights other than the right to leave the system and retirement, by the persons paying contributions on behalf and account of the participant.
In the employer group pension agreement, the rights to change the distribution of funds, change the pension plan and transfer the saving are used by the sponsoring organization as a rule until the end of the eligibility period determined in the agreement. Provided that it is stated in the pension contract, the sponsoring organization may transfer the use of the right to change the fund distribution to the participant. If the participant accepts, the rights stated in this paragraph may also be used by the sponsoring organization after having a right to retire.
b) Change of Fund Mix
You can change the distribution ratios or amounts of the savings in the private pension account and the paid contributions between the funds, a maximum of 6 times in 1 year.
Contribution distribution rates can be re-determined to cover contribution amounts to be paid from the date of request for change, savings in private pension account, savings in private pension account and contribution amounts to be paid from the date of request for change.
c) Change of Plan
You can change your pension plan a maximum of 4 times a year.
d) Transfer to Another Company
If it is not arranged by transfer from another company, you can transfer your pension agreement to another company by staying in the same company for at least two years from the effective date. In order for a agreement drawn up by transfer from another company to be subject to re-transfer, it must remain in the relevant company for at least one year. The transfer is made in such a way as to cover the entire saving and the amount related to the state contribution account.
If you owe entrance fees, this amount will be deducted from your savings.
No entry fee is charged for the new pension agreement in the company to which the transfer is made. Your rights regarding the period arising from the date of your participation into the Private Pension System are protected in the same way in the company to which the transfer is made.
e) Merging Accounts
The merging accounts process can only be performed when you are eligible for retirement.
If you have more than one pension agreement, when you become eligible for retirement, you can merge your accounts by making a request to one of the companies where you have valid agreements.
Entrance Fees and Deductions
With the Regulation that entered into force on 01.01.2016, the deductions that can be made from the private pension agreement have changed. In this context, an upper limit has also been set for the deductions that can be made within the first 5 years of the contract and as of the 6th year.
Deductions that can be made within the first 5 years:
During the first 5 years of the agreement, the total entrance fee and administrative expense deduction cannot exceed 8.5% of the monthly gross minimum wage announced for the first 6 months determined at the beginning of the relevant calendar year for each year.
Except for cases such as retirement, death, disability, if the agreement is terminated before the end of 5 years, the amount that can be received within the first 5 years and not collected until the date of withdraw can be deducted from the private pension account as a deferred entry fee.
After the first 5 years of the agreement, no deductions will be made under the name of entrance fees, administrative expense deduction until the end of the agreement.
Deduction and refund amounts to be made after the first 5 years;
In the 6th year of the private pension agreement and after, in case of exiting the contract, the upper limit control regarding the State Contribution will be made. The upper limit of the total deduction amount to be made is determined as the amount corresponding to a certain proportion of the amount in the state contribution account within the scope of the agreement.
On the basis of each agreement, the total amount of deductions to be made by the company from the effective date of the relevant agreement to the expiration date of the agreement cannot exceed the amount to be calculated using the rates in the table below over the amount in the State Contribution account, if any, within the scope of the contract on the termination date. The state contribution control will start to be carried out as of 01/01/2021.
Eligibility for retirement
You are entitled to retirement after you reach the age of 56, provided that you have been in the system for at least ten years from the date of your entry into the Private Pension System.
If you have more than one pension agreement, it is sufficient to earn this right from at least one of them to be eligible for retirement from all agreements. You can use your pension right by making a request to one of the companies with which you have agreements in force as of the date you obtain the pension right, and by merging your accounts related to your other contracts with the accounts related to your contract at the company you request. The company to which the application is submitted conducts your account merging transactions in accordance with the information it will receive from the Pension Supervision Center, the regulatory organization, regarding your accounts in other companies.
During the retirement agreement period, you can suspend the contribution payment. The period in which you pause the payment is also taken into account in the calculation of the period for eligibility for retirement.
After you become eligible for retirement, you can get your savings back in 3 ways.
Scheduled repayment
• Your savings remain in the Private Pension System and continue to receive returns.• Your savings will be paid back in parts within the framework of the program that you will determine together with the company.
• You can change your repayment program no more than twice a year.
• You reserve the right to receive your money as lump sumat any time.
• Income tax deduction is made on the repayment amount.
Lump sum
• Your savings in your private retirement account are paid as a lump sum after the withholding deduction is made on the return of your savings.