Automatic Participation Frequently Asked Questions


Whom does the Automatic Enrollment System cover?

All Turkish citizens and holders of a blue identity card under 45 years old who are employed and newly recruited under the employment categories of 4a and 4c are included in the automatic enrollment system. In addition, pursuant to the law enacted by The Turkish Grand National Assembly with case no. 1/796 on 09.01.2017, the automatic enrollment system also covers those employees under forty-five years old who are members of the pension funds covered by provisional article 20 of the Law No. 506 and their employers.

When will the public entities participate in the automatic enrollment system?

The public entities will be gradually included into the automatic enrollment system in two parts. Accordingly,

(a) Pursuant to sub-paragraphs (a) and (c) of first paragraph of article 4 of the Law No. 5510, the persons employed as of 1/4/2017 by the public administrations contained in the lists (I), (II), (III) and (IV) attached to the Public Finance Management and Control Law No. 5018, dated 10/12/2003, will be included in the respective pension plan from 1/4/2017 on.

(b) Pursuant to sub-paragraphs (a) and (c) of first paragraph of article 4 of the Law No. 5510, the persons employed as of 1/1/2018 by the other public administrations will be included in the respective pension plan from 1/1/2018 on.

When will the employers in the private sector participate in the automatic enrollment system?

The employees in the private sector will be gradually included into the automatic enrollment system depending on the size of the business where they are employed.

Accordingly,

(a) The persons employed by a business where the number of employees is one thousand and above will be included into the system from 1/1/2017 on;

(b) The persons employed by a business where the number of employees is two hundred fifty and more but less than one thousand from 1/4/2017 on;

(c) The persons employed by a business where the number of employees is one hundred and more but less than two hundred fifty from 1/7/2017 on;

(d) The persons employed by a business where the number of employees is fifty and more but less than one hundred from 1/1/2018 on;

(e) The persons employed by a business where the number of employees is ten and more but less then fifty from 1/7/2018 on and by a business where the number of employees is five and more but less than ten from 1/1/2019.

(f) The employees who are members of one of the pension funds established under temporary article 20 of the Law No. 506 will be enrolled in the pension plan at latest upon the payment of the contribution deducted by the employer from the first salary of the employee after 1/1/2019 to the respective pension company.

When will the businesses employing less than five persons be included into the automatic enrollment system?

Under the existing regulations, any businesses employing less than five persons are not covered by the automatic enrollment system.

How to calculate the number of employees based on which date? Are such employees who are above 45 years old, foreign nationals, expatriates, interns, subcontractor's employees, and seasonal workers to be included in the number of employees?

The number of employees of a business will be calculated for the purpose of the automatic enrollment based on the employment declaration submitted by the employer for each employee to the Social Security Institution in accordance with the Regulation on the Social Security Procedures. So, whether the employees meet the conditions for inclusion into the Automatic Enrollment System will not be taken into account. In other words, a distinction between the employees, such as being under/above 45 years old, being national/foreigner/expatriate, being employed at a branch office and/or more than one workplace, etc. will not be made.

With respect to a subcontractor's employee, if the payroll of that employee is processed by the subcontractor as the employer, that employee will be counted toward the number of employees of the subcontractor. Otherwise, that employee will be counted toward the number of the employees of the principal employer.

In the calculation of the number of employees, the most recent data with the Social Security Institution as of the date of inclusion are used. For example, a business with 40 employees which is due for inclusion into the automatic enrollment system on 01.07.2018, the total number of employees stated in the monthly social insurance premium and service document (the data of "Number of Insured Employees" under the heading of "Information on the Total Number of Employees") submitted by it for May to the Social Security Institution until June 23 is taken into account to determine the elibility of the business for its inclusion into the system.

How will a change in the number of employees after the date for gradual inclusion into the system affect the employer?

(I) If the number of employees of an employer who has been included into the automatic enrollment system is reduced after the inclusion will not affect the status of the employer. In other words, the employer remains in the system.

(II) If an employer who does not have the number of employees given under the question (3) above at the respective date for gradual inclusion reaches the required number of employees after that date, the employer will wait until the beginning of the next calendar year for inclusion into the system. Inclusion of a business into the automatic enrollment system based on the number of employees is possible only if it reaches the required number of employees at the respective date for gradual inclusion. . An example is given below:

(III) All businesses which have reached 5 and more employees as of 01.01.2019 must be included into the Automatic Enrollment System.

(IV) All public entities and organizations having the status of public administration will be included into the Automatic Enrollment System at latest upon the payment of the employee's contribution deducted by them from the first salary payment to the respective employee at the beginning of the next calendar year following the date when they were established or gained the public administration status to the respective pension company.

Will a conglomerate or a holding company be considered as a single business in terms of inclusion into the automatic enrollment system?

To determine the eligibility of a conglomerate consisting of multiple independent companies for inclusion into the automatic enrollment system, the number of employees can be taken into account separately for each company or collectively.

Will any two companies managed by the same board of directors be included into the automatic enrollment system together?

A capital company being subject to the provisions of the Turkish Commercial Code is considered as an employer in the category of private legal entity. Therefore, each capital company is considered as a separate employer, regardless of whether it is administered together with another company by the same board of directors.

Will those who are employed in any countries which have not signed a social security treaty with Turkey (the insured persons covered by article 5(g) of the Law No. 5510) be included into the automatic enrollment system?

Workers of Turkish national who are employed by businesses doing business in any countries which do not have a social security treaty with Turkey are excluded from the automatic enrollment system.

When an employer recruits a new employee, if that employee (I) had enrolled in the automatic inclusion system but left the system previously, (II) has enrolled in the system and is still in the system, (III) has never enrolled in the system, how will be the inclusion of that employee into the system?

(I) Any employees meeting the criterion given in the answer to the question 1 will be re-enrolled in the system if their new employer is included in the Automatic Enrollment System.

(II)If the new employer is included in the Automatic Enrollment System, the employee will make transition to the pension plan offered by the new employer. If the new employer is not included in the Automatic Enrollment System, the employee can remain in the system by submitting a notice to his or her pension company until the end of the month following the date of change of employer and paying the contributions personally based on the existing plan and when the new employer is included into the system, he or she makes a transition to the workplace-based pension plan offered by the new employer.

(III) Any employees meeting the criterion given in the answer to the question 1 will be enrolled in the system by the new employer if the new employer is included in the Automatic Enrollment System

Will an employee who worked only one day and then quit the job after his or her employment contract procedure has been completed be enrolled in the system?

Any employees whose salary base has reached the limit for social security premium deduction and pension deduction will be enrolled in the system, regardless of the number of days worked by them.

How will any persons who are employed by more than one employer be enrolled in the system?

Such persons will be enrolled in the pension plan offered by each employer.

As an employer, what are my obligations under the automatic enrollment system?

(a) Selection of the pension company: Pursuant to article 12 of the Law No. 5510, each employer is obliged to execute a contract with a pension company on behalf of his or her employees.

(b)Selection of the pension funds: The employer will ask the employee to choose between an interest-bearing and a non-interest-bearing pension fund and if the employee does not make this choice, the employer will do it. The contract with the pension company can provide that each employee will notify the choice of pension fund directly to the pension company.

(c) Payment of the contribution: The employer is obliged to deduct the employee's contribution from his or her salary and pay it to the pension company.

(d) Delegation of obligations: Depending on the operational burden, an employer can delegate the performance of his or her obligations, other than the choice of the pension company and the deduction of the contribution, to the pension company.

If the employer fails to fulfill his or her obligations, the Ministry of Labor and Social Security will charge an administrative fine to the employer.

What are the forms to be signed by the employer?

A contract detailing the obligations of the parties will be signed between the employer and the pension company.

What is the required minimum content of the pension contract signed between the employer and the pension company?

The required minimum content of the pension contract is set out in the circular no. 2016/39, dated 30.12.2016, issued by the Ministry of Treasury and Finance.

Can an employer sign a pension contract with more than one pension company?

An employer can sign a pension contract with more than one pension company.

Can an employer replace the pension company with another one?

Replacement of a pension company with another one by the employer is referred to as a "transfer". The employer can replace the pension company with another one after the elapse of two years from the date of signing of the contract with the original pension company and after the elapse of one year from the date of signing of the contract with the second pension company.

Can the parties agree in the contract on any date for payment of the contributions?

Under articles 22/D and 22/F of the Regulation on the Private Pension System, the employer and the pension company can freely agree in the pension contract on a date for payment of the contributions.

Is there any additional benefit or bonus under the Automatic Enrollment System?

A pension company can offer various additional benefits for the employees, but it is forbidden to offer any favor or pay a bonus to the employer.

How a pension is chosen and replaced with another one?

At the time of enrollment in the system, the employees will be asked of their choice for an interest-bearing or a non-interest-bearing pension fund. However, if an employee does not make a choice in this regard, the choice will be made by the employer on behalf of the employee.

Accordingly, the contributions will be invested in the interest-bearing or non-interest-bearing pension fund as chosen by the employees for a period of 1 year. At the end of 1-year period, the contributions will continue to be invested in any interest-bearing or non-interest-bearing standard pension fund depending on the choice of the employee.

At the end of the initial period, the employee can change the distribution of the pension funds. Before such change, the employee will be asked to fill a risk profile questionnaire. The employee can make a choice between the pension funds defined as (I) conservative, (II) balanced, (III) dashing, and (IV) aggressive in the system, as well as between the initial and standard pension funds. The employee can change the distribution of the pension funds 6 times over a year. After the end of the initial period (two months), the employees can make the change of the distribution of the pension funds via the Internet Branch Office for Individuals and the Mobile Branch Office of Ziraat Emeklilik.

In which investment instruments will the pension funds be invested?

The pension funds can be invested in public or private sector domestic/international borrowing instruments, interest-bearing time deposits, non-interest-bearing participation deposits, lease certificates, shares of stock, precious metals, money market operations, reverse repo, etc. depending on the choice of the employee.

Can an employee suspend the payment of contributions? How can this request be submitted?

An employee can request suspension of the payment of contributions. However, request for suspension of contribution payments cannot be made during the initial period. At the end of the initial period (2 months), an employee can submit the request for suspension of contribution payments via any digital channels (Internet Branch Office for Individuals, Mobile Branch Office, Client Communication Centre) of Ziraat Emeklilik.

How will the contribution be calculated?

It will be calculated based on the monthly salary as the basis of the social security premium and the pension contribution.

Can an employee change the rate of contribution (3%) as provided in the legislation?

By paying contributions above 3%, an employee can benefit more state contribution, which is 25%. An employee can submit a request for increase of the contribution rate via the digital channels (Internet Branch Office for Individuals, Mobile Branch Office, and Client Communication Center) of Ziraat Emeklilik.


How to track the contributions to make sure that they are paid correctly?

Collections and other aspects of the system will be tracked by the pension company and/or the Pension Supervision Center which is authorized for this purpose.

How can the employees track their contributions?

employees can track their contributions and other details of their account on a screen logged in on the website of the respective pension company. In addition, the company sends an "employee information note" to the employees quarterly to inform them about the contributions paid by them. In addition, the employees can examine their account via the digital channels (Internet Branch Office for Individuals, Mobile Branch Office and Client Communication Center) of Ziraat Emeklilik.

There is also a portal on the website of Takasbank [Clearing Bank] where the employees can track their savings

Will the contributions paid be reflected to the payroll?

For the spending units of the public entities which carry on their monthly transactions via the information system of the Finance Ministry (General Directorate of Accounting), system developments are to be done to reflect the contributions to the payroll of the employees.

For the other entities, to reflect the contribution deductions of the employees to their payrolls in their internal systems and to develop other internal salary tracking system are important for the tracking of the operational processes.

Can the employees covered by the Automatic Enrollment contracts pay an additional contribution (apart from the regularly paid contributions)?

Employees cannot pay additional contributions to their account externally.

Some employees' working hours and salaries are not fixed. Will a different method be used regarding the contribution payments from the salaries of such and other similar employees? Will a contribution be paid on a bonus and any other extra wages paid to the employees?

There is not any different method applied to such situations. The contribution will be calculated on the salary base of the employee declared to the Social Security Institution. Accordingly, the contribution will be deducted from the salary base of the employees which comprises all the payments made to them.

If any legal deduction, such as attachment, alimony, etc., is made from the salary of an employee, can the contribution be deducted from the salary of that employee?

So long as the salary base is not changed, the amount of the contribution will not change.

Can an employer pay the whole amount of the contributions of the employees to their account with the Automatic Enrollment System instead of deducting them from the salaries of the employees?

No. An employer who wishes to pay contributions in that way must establish IGES, but he or she is in any case obliged to enroll the employees in the Automatic Enrollment System.

If an employer fails to pay the contributions deducted from the salary of the employees to the pension company at the date for payment or pays the contributions in short or fails to deduct contributions, is there any penal sanction for this?

If an employer fails to pay the contributions to the pension company on a timely manner or pays the contributions in short or at a later date or fails to enroll any employees in the system, he or she will be liable for any financial loss incurred by the affected employees. For each violation, the Ministry of Labor and Social Security charges an administrative fine amounting to 100 Turkish lira to the employer.

If an employer fails to pay the contributions deducted from the salary of the employees to the respective pension company, how will the grievance suffered by the affected employees be remedied?

By checking the amount of the contributions deducted from their salary and paid to their pension account on the payroll or the "employee information note" sent by the company to the employees quarterly or via the digital channels made available by the company to the employees, the employees can detect non-payment of any contribution to their pension account.

The sum of any unpaid contribution and the potential income lost by the employee will be collected from the employer and paid to the pension account of the employee.

How will the contribution be calculated for the period when no salary is paid to an employee (for reason of unpaid leave, unpaid sickness leave, etc.)?

The contribution is deducted from the salary base of the employee, and any factor that affects the salary base for the social security premium is taken into account in the calculation of the pension contribution to be deducted from the salary. By giving a notice to the pension company, no contribution is paid to the pension account of the employee for the period when there is no salary base for the social security premium and when no salary is paid to the employee.

Will the contributions of the employees of a subcontractor be paid by the subcontractor to the pension company?

If the payrolls of the employees are processed by the subcontractor, the contributions of the employees will be paid by the subcontractor to the pension company. Otherwise, the contributions will be paid by the principal employer.

Can the employees use their right to withdraw on the same day when the employer signed the pension contract? When the right to withdraw can be used?

The enrollment of an employee in the pension plan is notified by the pension company by mail or any safe electronic communication means to the employee on the next business day of the day when the contribution deducted from the salary of the employee according to the respective pension plan was paid to the account of the employee with the pension company. employee can use the right to withdraw during the initial period (2 months).

How will the withdrawal and leaving procedures be fulfilled?

The enrollment of an employee in the pension plan is notified by the pension company by mail or any safe electronic communication means to the employee on the next business day of the day when the contribution deducted from the salary of the employee according to the respective pension plan was paid to the account of the employee with the pension company. employee can use the right to withdraw within the initial period. After the initial period, the employee can leave the system at any time when he or she wishes. employees can fulfill the withdrawal/leaving procedures via the digital channels (Internet Branch Office for Individuals, Mobile Branch Office, and Client Communication Center) of Ziraat Emeklilik.

Can an employee who becomes unemployed remain in the Automatic Enrollment System? Can an employee who takes a job at another business continue the existing pension plan if the new business does not offer a pension plan?

(1) If an employee enrolled in the private pension system takes a job at another workplace of the same employer who has enrolled him or her in the pension plan or if an employee terminates the employment contract and takes a job at another business, this is deemed a change of workplace.

(2) An employee who is in the system as of the date of change of workplace can continue to pay contributions in an amount determined by the Ministry to his or her account under the private pension plan provided by his or her previous employer or request the pension company to transfer the savings and the state contribution, if any, in his or her account to another certificate available in the system for such situations.

(3) If the employee does not submit a request under second paragraph above, the respective certificate is suspended.

(4) The employee can at any time request the pension company to transfer the savings and the state contribution, if any, in his or her account to which he or she continues to pay contributions under second paragraph above to another certificate available in the system for such situations.

(5) If the employment contract of an employee who has been enrolled in the private pension system previously is terminated without a change of workplace, the provisions of this article are applied by analogy.

Which fees are charged for the Automatic Enrollment System to an employee at the time of enrollment, over the period when he or she remains in the system and at the time of leaving the system?

No deduction is made from the pension account of an employee at the time of enrollment in or leaving the system. Only the fund operation expense deduction (FOED) can be made on the savings in the pension account of an employee during the period he or she remains in the system.

Can an employee who has withdrawn from or left the system enroll in the system again at any time when he or she wishes?

An employee who was enrolled by his or her employer in the pension plan covered by this Regulation but used his or her right to withdraw or leave previously is re-enrolled in the pension plan automatically for only one time within 3 years in accordance with the rules established by the Ministry. The Ministry is authorized to reduce this period up to 1 year and to increase it up to 5 years.

Can an employee who left the system and then re-enrolled in the system continue to benefit from the advantages provided by the system in the same manner?

In terms of the state contribution, an employee who left the system and then re-enrolled in the system can benefit from the state contribution of 25% again, but the previously earned time for entitlement to the state contribution will be lost and the time required for entitlement will start over again.

At the time of enrollment in the system, the state makes an initial contribution amounting to TL1,000 for one time only to the account of the employee following the end of the initial period. If an employee who left the system by terminating all the certificates re-enrolls in the systems, the initial state contribution will not be paid again. If an employee who used the right to withdraw within the initial period re-enrolls in the system, the initial state contribution will be paid to his or her account if it has not been paid previously.

When an employee retires under the private pension system, an additional state contribution at the rate of 5% will be paid to him or her.

In terms of entitlement to retirement: The times elapsed when the employee was in the system are not counted toward the time required for entitlement to retirement.

What are the state contributions under the Automatic Enrollment System?

There are 3 different state contributions under the system:

(a) A state contribution amounting to 25% of the contribution paid by the employee;

(b) An initial state contribution amounting to TL1,000 paid to the pension account of an employee who has not used the right to withdraw;

(c) A state contribution amounting to 5% of the savings in the pension account of an employee who chooses to receive his or her savings as monthly pensions (who chooses the annual income insurance of minimum 10 years).

Will the limit of the state contribution paid to an employee who has a private pension plan outside the Automatic Enrollment System be applied to the contracts under the Automatic Enrollment System as well? Or is the upper limit of the state contribution under the Automatic Enrollment System determined separately?

The upper limit of the state contribution under the contracts under the Pension Automatic Enrollment System is calculated independently of the limit of the state contribution under the Private Pension System.

The annual gross minimum wage for 2020 is TL35,316.00 (monthly gross minimum wage of TL2,943.00 x 12), and if you pay a contribution in that amount, the state will pay a maximum contribution of TL8,829.00 which is 25% of your contribution to your pension account.

Sample Calculation of State Contribution*

  Sample Calculation 1 Sample Calculation 2 Sample Calculation 3 Sample Calculation 4
Monthly Contribution TL200 TL500 TL1,000 TL2,943.00
Annual Total Contribution TL2,400 TL6,000 TL12,000 TL35,316.00
Monthly State Contribution TL50 TL125 TL250 TL735.75
Annual Total State Contribution TL600 TL1,500 TL3,000 TL8,829.00

*The same calculation method is used for the Private Pension System which is based on voluntary participation.

Is there a time required for entitlement to the state contribution paid under the Automatic Enrollment System?

The times required for entitlement to the state contribution incentive at the rate of 25% and to the initial state contribution incentive amounting to TL1,000 are the same, and the times required for entitlement to the state contribution are as follows:

(a) Between the third year and the sixth year in the system, eighty-five percent of the state contribution payable to the pension account of an employee is recorded as a promise and fifteen percent is paid to the pension account in cash.

(b) Between the sixth year and the tenth year in the system, sixty-five percent of the state contribution payable to the pension account of an employee is recorded as a promise and thirty-five percent is paid to the pension account in cash.

(c) From the tenth year in the system on, forty percent of the state contribution payable to the pension account of an employee is recorded as a promise and sixty percent is paid to the pension account in cash.

(d) If the certificate is terminated by using the right to retirement or for reason of death or disability, whole amount of the state contribution in the pension account of the employee is paid to the cash account of the employee.

Calculations are done separately for each certificate.

Can the times earned toward the retirement and the state contribution under the Automatic Enrollment System be combined with the times earned toward the retirement and the state contribution under the Private Pension System?

The times and other rights and obligations applicable to the retirement and state contribution under the Automatic Enrollment System cannot be combined with the private pension contracts executed outside the Automatic Enrollment System.

Will the state contributions made available to the employees under the Automatic Enrollment System be invested in any pension fund? How will the state contribution be valued?

The state contributions are made available as a promise and the promised amounts are recorded in the state contribution account of the employee, which can be tracked on the website of the company. The state contribution at the rate of 25% is valued based on the change in the Consumer Price Index (CPI) at the beginning of each calendar year following the month when the state contribution is calculated.

If the employee becomes entitled to any payment from the pension account, the earned part is paid in cash to the pension account of the employee and invested in any state contribution funds.