Two recent amendments have been made to the Turkish legislation
on individual pension. The legislation amending the Regulation on
the Actuarial Audit of Entities which Commit to Pension has been
published in the Official Gazette dated 25 August 2016. Also, the
law amending the Individual Pension Savings and Investment System
Law no. 4632 has been approved by the Parliament and published in
the Official Gazette dated 24 August 2016.
Amendments to the Regulation on the Actuarial Audit of Entities
which Commit to Pension
In accordance with the recent amendments, entities which sponsor
a pension plan for their members or employees (referred to as
"service providers" in the legislation) are no longer
required to inform the Undersecretariat of Treasury of changes made
to the contact and management information, or to the pension
commitments. Also, the frequency with which information must be
supplied by the service providers has changed. The Treasury will
now determine the submission periods for the information and
actuarial reports based on the type of pension commitment, number
of members in the pension scheme and size of the commitment. The
service providers will send electronic data and financial
statements to the Treasury through electronic means, while the
actuarial reports will be sent to the Treasury by the actuary
authorised by the service provider, with an electronic or mobile
With regard to the actuarial report, the presumptions used by
the actuary will now be based on actuary principles to be
determined by the Treasury, in addition to the existing principles
already listed in Annex 2 of the Regulation. We would expect the
Treasury to announce these additional principles in the near
Although service providers are still required to notify the
Treasury of their pension commitment and get registered on the
service providers list kept by the Treasury, the three-month
notification period has been abolished.
A new clause governs the termination of the pension scheme in
further detail. In case of termination of the pension scheme, the
assets in the scheme will be fairly distributed to the members in
proportion to their vested rights and rights to be acquired, taking
into account the internal rules of the pension plan. The period to
notify the termination of the pension scheme to the Treasury has
been increased from one to three months. The notification of the
service provider to the Treasury must include a business plan for
the termination addressing, among others, the intended termination
period, the amount of payments to be made to the scheme members and
the manner of payment. Unless the Treasury objects to the
termination of the pension scheme within one month of the
notification, the service provider can proceed with the termination
process and again notify the Treasury once it is complete.
The amendments have entered into force on 25 August 2016.
Amendments to the Individual Pension Law
The new amendments have introduced a system of self-enrolment in
the individual pension system to the benefit of employees.
Employers are now required to enrol all their salaried employees
who are Turkish citizens under the age of 45 into a pension scheme.
The Council of Ministers, however, is authorised to determine the
workplaces and type of employees which will be included into a
pension scheme and the implementation principles.
Employers may only enrol their employees into a pension scheme
issued by a pension company which is deemed appropriate by the
Treasury. Although the employees will have an opt-out right within
two months after being notified of their enrolment in the pension
scheme, the recent amendments will likely increase the number of
individual pension schemes in the market.
In case an employee uses the opt-out right, the contribution
payments made from the employee's salary together with the
investment incomes, if any, shall be returned to the employee
within ten business days. The pension company is responsible for
the fund management to secure the value of the contribution
payments during the opt-out period. Furthermore, the pension
companies will be responsible for the collection of the
contribution payments, and no deductions can be made except for the
fund management fee.
The amendments will enter into force on 1 January 2017.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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