Turkey: Auto-enrolment – Final Stages Of Implementation
The phased introduction of pension auto-enrolment enters its final stages, with compliance for smaller private sector employers in Turkey required from 1 July 2018 and 1 January 2019.
In 2016, the Turkish Government introduced the requirement for companies to automatically enrol their employees into a private defined-contribution pension plan held with an authorised pension company. The requirements took effect from 1 January 2017 for private sector employers with more than 1,000 employees, with a phased introduction for other employers, depending on the number of employees the company has. By 1 January 2018 all private sector employers more than 50 employees needed to implement the auto-enrolment requirements.
The final deadlines in the phased introduction of the legislation are:
- 1 July 2018 for private sector employers with 10 to 49 employees
- 1 January 2019 for private sector employers with 5 to 9 employees
Only employees aged under 45 must be automatically enrolled into a pension plan, and they are required to pay pension contributions of at least 3% of contributory earnings. The State will also contribute to these plans, with a one-off contribution of TL 1,000 when an employee first joins the system, plus 25% of the employee’s monthly contributions (up to a maximum of 25% of the annual minimum wage, and subject to vesting conditions). Employers are not required to contribute to the pension plan, but are responsible for transferring the employees’ contributions to the plan. Employees can choose to opt out of the plan and receive a refund of their contributions and any returns; if they do so within 2 months of being notified of their enrolment in the plan the refund is penalty-free.
Experience in Turkey suggests that many employees who are automatically enrolled in a pension plan choose to opt out. The Ministry of Finance has proposed draft legislation that could extend the penalty-free opt-out period to 6 months as well as increasing the one-off state contribution. However, there is no indication so far of mandatory employer contributions being introduced – it is thought that one reason for the low take up of these plans is the lack of employer contributions to these plans.
Contacts
Isabel Coles
Head of International Consulting, MBWL International
VIEW PROFILE
Email:
isabel.coles@mbwl-int.com
Tel: +44 20 3949 5710
Isabel Coles
Head of International Consulting, MBWL International
A multilingual expert in employee benefits for multinational corporates.
Isabel heads up MBWL International, advising multinational organisations on their employee benefits arrangements around the world, with a focus on corporate sales and purchases, accounting disclosures and the financing, risk management and design of benefit plans.
Her vast experience includes leading global accounting consolidations under international, UK and US accounting standards for multinational companies headquartered in the UK and overseas – with consolidations ranging in size from two to over 50 defined benefit plans.
She has advised both corporate and private equity buyers on the employee benefit considerations (including pension liabilities) associated with corporate sales and purchases in Europe and worldwide, from due diligence through to closing and subsequent integration work. Isabel has also undertaken many benefit audits and benchmarking exercises, including a 25-country audit for a company in the technology sector.
Other areas of Isabel’s expertise include reviewing and establishing international pension plans, advice on individual expatriate employee benefit packages and supporting multinationals in agreeing and implementing global governance approaches and policies for managing their employer benefit plans.
Isabel chairs the International Committee of the Association of Consulting Actuaries and is fluent in German and French.
Contacts
Isabel Coles
Head of International Consulting, MBWL International
VIEW PROFILE
Email:
isabel.coles@mbwl-int.com
Tel: +44 20 3949 5710
Isabel Coles
Head of International Consulting, MBWL International
A multilingual expert in employee benefits for multinational corporates.
Isabel heads up MBWL International, advising multinational organisations on their employee benefits arrangements around the world, with a focus on corporate sales and purchases, accounting disclosures and the financing, risk management and design of benefit plans.
Her vast experience includes leading global accounting consolidations under international, UK and US accounting standards for multinational companies headquartered in the UK and overseas – with consolidations ranging in size from two to over 50 defined benefit plans.
She has advised both corporate and private equity buyers on the employee benefit considerations (including pension liabilities) associated with corporate sales and purchases in Europe and worldwide, from due diligence through to closing and subsequent integration work. Isabel has also undertaken many benefit audits and benchmarking exercises, including a 25-country audit for a company in the technology sector.
Other areas of Isabel’s expertise include reviewing and establishing international pension plans, advice on individual expatriate employee benefit packages and supporting multinationals in agreeing and implementing global governance approaches and policies for managing their employer benefit plans.
Isabel chairs the International Committee of the Association of Consulting Actuaries and is fluent in German and French.