Everyone would like their retirement years to be an enjoyable stage of life. Most of us have dreamed of hobbies and activities that we hope to pursue once we enter our golden years. In order for these dreams to become reality it is necessary to accumulate a proper amount of savings. However due to problems in the current social security system, satisfactory retirement salaries cannot be provided, therefore, many people make additional investments to provide for their retirement.

Individual Pension System is a private system ensuring a comfortable and secure retirement through investment in various pension funds. After you complete a certain number of years, you receive your savings as a lump sum or as a monthly pension.

The system has been organized according to the Individual Pension Saving and Investment System Act that become effective on October 07, 2001. Individual Pension System is a private sector governed system supplementing the existing social security system. Whether or not you are covered by social security, participation in the individual pension system means you receive a second pension salary at the end of the specified period.

How Can You Participate In Individual Pension System?

You can participate in the system by signing a retirement contract with a retirement company which has obtained a retirement license from the Undersecretariat of Treasury. Such retirement company opens a personal pension account by which you can follow-up your savings besides your retirement contract.

Is the Individual Pension System a Supplement to SSK (Social Securities Institution), Pension Fund and Bağkur (Independent Entities)

It is hard to say today that satisfactory pension salaries are provided due to various problems of the social security systems. In the future, our population structure is expected to change in parallel to an increase in the retired population. Thereby, the balance of active workforce / retired and consequently pension salaries can possibly be negatively affected. Individual Pension System provides you with a second retirement income that supplements the retirement income provided by the state.

You Can Personally Manage The Investments For Your Retirement.

You can invest the contribution shares through making a selection among various investment funds. You have the right to change your selections four times in a year.

How does the System Function?

Who Can Participate?

Those working or unemployed, free-lance professionals, owners of small-scale enterprises, craftsmen, housewives, sportsmen, artists, those on payroll, in short anyone competent can participate in individual pension system.

Is the System Secure?

In order to ensure the security of individual pension system, the state has made all the necessary arrangements. Retirement Supervision Center supervise and audit the activities of pension companies on a daily basis. Further, the whole system shall also be audited by the Undersecretariat of Treasury and SPK (Capital Markets Board). Savings of participants shall be kept at Takasbank (Exchange Bank). Your Pension funds shall be wholly secured.

Is the System Transparent?

Yes, you can have access to your pension account and savings via different channels such as pension company call center, web –site, Alo Takas (Takasbank Call Center) at any time.

How Much should I Pay?

You can set your initial contribution share according to the cumulative amount or pension salary you wish to receive in future. You can start your payments with the minimum contribution share indicated on the pension plan you have selected. Pension company consultants will be glad to guide you in selecting the appropriate contribution share.

What is Pension Plan?

Is a composition of investment funds with an investment strategy in order for you to reach your investment goal for retirement.

How Will You Select Your Pension Plan?

According to current practices, the pension company is obliged to establish at least three retirement investment funds at different risk levels, Pension company consultants, upon determining your risk profile, shall be presenting the pension plans including pension funds and investment strategies best suitable for you. In case you are not satisfied with the returns of your current plan or funds, you have the right to change them four times in a year.

Can You Change Your Pension Company?

Yes, if you are not satisfied with the pension plan of your choice and the return of your retirement investment funds, you can transfer all your pension funds and accumulations in your pension account to another pension company.

Is there any Tax Advantage?

The system provides you with the following tax advantages;

During the payment period:

The contributions shall be subject to tax discount and the total of the contribution subject to this discount can not be more than 10% of the income obtained in the payment month (for the premiums paid for the individual policies other than individual retirement system, 5% of the income obtained in the relevant month) and the total minimum annual wage.

During the repayment period:

If the participant decides to leave the system before ten years, 15% of his/her accumulated savings shall be subject to a tax deduction.
If the participant decides to leave the system after paying contributions regularly for at least ten years but before filling the age of 56, then 10% of his/her accumulated savings shall be subject to a tax deduction.
If the participant fulfills all the legal obligations for retirement, 25% of his/her accumulated savings shall be exempted from the income tax (based on Income Tax Law, Article 21) and 5% over the remaining 75% shall be subject to taxation.

This case (case c) will also be valid for the participants who leave the system due to compulsory reasons such as death,incapability, or liquidation.