Automatic Enrollment System

In accordance with Article 4 of Law No. 5510 on Social Security and General Health Insurance, all current public and private sector workers under 45 years old, as well as new hires under 45, were automatically enrolled in the private pension system via their employers starting from 01.01.2017.

With the amendment published in the Official Gazette dated January 20, 2022, Temporary Article 2 of the Law No. 4632 was amended to allow employees over the age of forty-five to be included in the automatic enrollment system upon their request.

In accordance with the Law No. 4632, a gradual move towards the automatic enrollment of employees in the private pension system was carried out by their employers:

- as of January 1, 2017, for individuals employed in the private sector by a company with 1,000 or more employees;

- as of April 1, 2017, individuals employed in private companies with a workforce of 250 to 999 employees and individuals engaged in public administration within the central government and social security agencies listed in the attached tables of the Public Financial Management and Control Law No. 5018;

- as of July 1, 2017, for individuals employed in the private sector by a company with 100 to 249 employees;

- as of January 1, 2018, individuals employed in the private sector, local governments, and public enterprises with an employer that has 50-99 workers;

- as of July 1, 2018, for individuals employed in the private sector by a company with 10 to 49 employees; and

- as of January 1, 2019, for individuals employed in the private sector by a company that has between 5 and 9 employees.

- When calculating the employee count, for employers operating multiple locations, the cumulative total of employees across all sites will be considered. Furthermore, the latest Social Security Institution data available as of the coverage dates will be considered in determining the employee count.

Employees joining the Automatic Enrollment System will see a 3% deduction from their premium-based earnings or pensionable salary as a contribution. The base rate of 3% is fixed and cannot be altered by either the employee or the employer. For instance, workers earning the minimum wage of TRY 26,005* will contribute about 780 TL each month. The worker can ask for an increased deduction from his/her pay for the Automatic Enrollment System.

Participants must inform the employer of their requests for contribution increases or decreases before the wage calculation for the pertinent month is finalized. Requests submitted after the fee calculation is finalized will be addressed in the subsequent payment period.

* Calculated based on the Minimum Gross Wage for 2025.

The system does not apply any deductions except for the Fund Operating Expense Deduction (FİGK). The highest yearly Fund Operating Expense Deduction (FİGK) rate is 0.85%, while the highest yearly Fund Total Expense Deduction (FTGK) rate is 1.09%.

The state will engage in the process through three contributions.

- Under the same conditions as the current private pension system, the government will contribute 30 percent of the amounts deducted from workers' wages.

- If the employee does not exercise his/her right of withdrawal, an initial state contribution of TL 1,000 is calculated in the accounting period following the month in which the right of withdrawal expires, for once upon entry into the system.

- In case of exercising the right to retirement, the employee who prefers to receive his/her savings in the individual pension account within the scope of an annuity contract with a minimum ten-year term, is paid an additional state contribution equivalent to *5% of his/her savings.

* With the exception of mandatory circumstances like death, disability, or liquidation, should the single premium annuity insurance be discontinued prior to the end of ten years, twice the extra state contribution amount shall be returned to the general budget to be logged as income in accordance with the processes governing the unearned state contribution. Nevertheless, the refundable portion of unearned state contribution is restricted to the subscription amount that the employee will obtain from the corresponding pension company upon terminating the annuity prior to 10 years.

No payment for contributions will occur aside from deductions from the employee's wages.

No, contributions will only be made by employees in the Automatic Enrollment System.

The employer transfers the contribution to a single account specified by the pension company through the bank no later than the working day after the wage payment day. The payments from the expenditure units that perform their monthly transactions via the information systems of the Ministry of Finance (General Directorate of Accounting) are deposited into the same account of the company.

As part of the operation of the system, a key duty of employers is to remit the employee's contributions to the pension company by withholding them from the employee’s salary.

If the employer fails to transfer the contribution to the pension company on time or transfers it late, the employer must compensate for any monetary loss that may occur in the employee’s savings.

ARTICLE 4 (Recess)- (1) An employee may submit his/her recess request to the company or the employer based on his/her choice. Within five working days after receiving the recess request, the company or the employer must notify the other party about the request for such a recess. The request for a recess is valid from the second wage payment after the request date, at the latest, until the employee requests reimbursement of contributions or for the duration of the requested recess. (2) No time limit is applied for the recess period. (3) Periods during which the employee is not paid for reasons such as unpaid leave, etc. are not considered as a recess period.

The conditions in the current PPS also apply to the Automatic Enrollment System. Individuals who remain in the system for a decade and attain the age of 56 will qualify for retirement. The current state contribution vesting periods remain unchanged in the new system. The vesting periods for the state contribution are as follows:

- If you exit the system within the initial three years, you will become ineligible.

- 15% by the end of the third year.

- 35% by the end of the sixth year.

- 60% by the end of the tenth year.

- Everyone, if qualified for retirement.

Individuals holding multiple Automatic Enrollment contracts will have the option to merge them and utilize their pension benefits if they qualify for retirement from any one of them.

If the employee chooses to exit the system by exercising his/her right to retire, he/she will have the opportunity to combine accounts in his/her contracts. If the participant holds multiple contracts under the Automatic Enrollment System with the same or various companies, the earliest entry date of the active contracts will be considered. Employees who exit the system can be re-entered into it automatically every two years. The Undersecretariat has the authority to shorten this duration to a minimum of 1 year and extend it to a maximum of 3 years.

The savings in the private pension account of an employee who joins the private pension system and is enrolled as of the workplace change date, along with any state contributions made, will be transferred to the plan at the new workplace if a pension plan exists there for employees. Furthermore, the employee's accrued retirement period and eligibility for state contributions will be maintained in the new workplace’s plan.

If the new workplace does not provide a pension plan for employees, they can keep contributing at least three percent of the minimum gross wage during the first six months of the relevant calendar year under the pension plan from their former workplace.

In case a new workplace is covered, the employee participates in the pension plan offered by his/her employer at the new workplace.

If the new employer does not provide a pension plan for employees and the employee chooses not to keep contributing, the employee is removed from the corresponding pension contract.

The employee is required to inform the company of his/her request for payment of contributions by the end of the month that follows the change of workplace.

Yes, every employee qualified for the Automatic Enrollment System will be part of the system.

Participants who had a PPS prior to the Automatic Enrollment System will be eligible for a one-off initial state contribution of TRY 1,000, provided that they join the Automatic Enrollment scheme and do not exercise their right to withdraw.

Along with the 30% state contribution they get for their current contracts, participants will also gain a 30% state contribution for the Automatic Enrollment contract.

Furthermore, if participants stay in the Automatic Enrollment System after the 2-month withdrawal period, they qualify for a one-time initial state contribution of TRY 1,000.

If the pension entitlement is obtained and the savings are transferred to income insurance for a minimum of 10 years, an “extra state contribution” of 5% of the overall savings will be included. Furthermore, the thresholds for the primary state contribution and the supplemental state contribution made will be assessed and tracked individually.

* It may not exceed the total yearly gross minimum wage set for the applicable calendar year.

The periods of pension and state contributions, along with other rights and obligations acquired through the Automatic Enrollment System, cannot be merged with PPS contracts that are not formed under the Automatic Enrollment System.

Throughout the two-month withdrawal timeframe, the contribution portion is allocated to the original fund chosen by either the employee or the employer, as relevant. The pension company is responsible for fund management to ensure that contributions paid during the withdrawal period retain their value. Employees who finish the withdrawal period and do not select a fund have their savings continued to be invested in the appropriate initial fund for an additional ten months. The savings of employees who have finished one year and do not indicate a fund preference are placed in the standard fund based on their initial choice of interest-bearing or non-interest bearing funds.

Following the completion of the withdrawal period, the employee may request to leave the initial fund or the standard fund. These employees are offered a risk profile questionnaire, the results of which are non-binding, and contributions and savings are directed to investments in line with the employee’s preference.

The employee holds the right to alter fund allocation, although this right may be assigned to the asset management firm if desired. This request is submitted to the company for it to be passed on to the portfolio management firm.

An automatic enrollment contract will be established with every employer of the employee.

The contribution amount to be paid remains the same as long as the earnings and pension deductions stay unchanged.

If the employee desires to remain in the applicable pension plan, he/she is entitled to manage this contract. If the participant wants to keep making payments to the Automatic Enrollment contract after resigning from his/her position, he/she can continue contributing at a rate of no less than three percent of the minimum gross wage for the initial six months of the applicable calendar year.

Distinct state contribution limits are established for contracts covered by the AES and for contracts covered by PPS. In other words, considering the upper limits of state contribution for the year 2025, you can qualify for the annual maximum state contribution upper limit of TRY 93,619 for both your PPS and OES contracts by paying a contribution of TRY 312,066 to both your automatic enrollment contract and your voluntary PPS contract separately.

Eligibility for the state contribution in the AES is subject to certain time limits and rates:

If employees wish to leave the system with EYT before these periods end, they will forfeit the state assistance allotted to their savings. Nonetheless, because their AES certificates are registered in their name, they can remain in the system by submitting an application to the company that issued the AES certificate within 10 working days after receiving the termination notice and externally remitting the contribution amount they choose. In this scenario, if these people spend 10 years in the AES and stay in the system until they turn 56, they will be eligible for all the system's benefits, particularly the 30% government contribution, and will have the opportunity to boost their income via private pension entitlements.

New AES certificates will be issued for individuals who retire through EYT and remain employed at the same workplace. Individuals aged over 45 can continue participating in the AES with an AES certificate for which contributions are being made.

The certificates of employees who will retire through EYT and continue to work in a new workplace, if the new workplace is included in the AES system, can continue without any interruption by transferring the contract period, accumulation and return of the employee to the AES contract to be created at the new workplace upon the request of the participant. If an individual is older than 45, they can keep participating in the AES by transferring any AES certificate within the system to a contracted pension company if they wish. Should the new workplace not be part of the AES system, the employee may, upon request, maintain individual contributions under the contract from their prior workplace.