What are the advantages of Private Pension?
The Private Pension System entitles individuals to a second retirement benefit aimed at improving their living standards during their retirement. It does this by providing them with an additional income, which is earned by channeling their savings into long-term investments. In the Private Pension System, entitlement conditions include reaching the age of 56 and staying in the system for a minimum of 10 years.
With the new regulations that came into effect on January 1, 2013, any Turkish citizen of 18 years of age (either working or not working) is eligible for 25 percent state contribution when they enroll in the system. With the latest amendment adopted on June 7, 2013 and effective January 1, 2013, all Blue Card holders, upon their enrollment in the system, also qualify for state contribution.
The maximum private pension-related state contribution an individual may receive in one calendar year cannot exceed 25 percent of the gross minimum wage applicable for that year.
Since the gross minimum wage for 2014 is set at 13,230.00 Turkish lira, if an individual pays a contribution equal to this amount, the state will deposit a maximum contribution of 3,307.50 Turkish lira into a sub-account opened in their name; equal to the 25 percent of the minimum wage.
The upper limit set for this state contribution is applied on an individual participant basis. For an individual that pays contributions on more than one pension agreement, the total amount of state contributions to be calculated (for the total contributions a participant paid) will be prorated according to the contributions the participant paid per pension agreement in a given month. The total amount of contributions a participant paid in one calendar year (to be included in the calculation of state contribution) is equal to the annual gross minimum wage.
Taxpayer or not, any participant paying a contribution is entitled to a state contribution.
For participants who enrolled in the private pension system before January 1, 2013, (and who are up to date on their payments until January 1, 2016) an entitlement period shall be added in the pension agreements as a condition of eligibility for the state contribution. The entitlement period applicable is dependent upon the duration of participant's time in the system.