Many citizens in our country enter jobs with social security and thereby benefit from retirement rights and discounted healthcare services. Retirement is one of the most important issues for people; it includes retirement bonuses and pensions. In addition, there are details about the mandatory Individual Pension System (BES) for employees. Before discussing those details, it is useful to explain what the Individual Pension System (BES) is.
The Individual Pension System, abbreviated as BES, is a program that enables people to build regular savings to secure their retirement. Through this system, participants can maintain a standard of living in retirement that is closer to the level they had while working, allowing more financial comfort during their later years.
New decisions regarding the Individual Pension System, approved by the Grand National Assembly of Turkey’s Plan and Budget Commission, took effect on January 1, 2017. Under this legislation, employees are automatically enrolled in a pension plan, but they also have the right to opt out if they choose. In other words, those initially enrolled can later exercise the option to withdraw from the system.
Not everyone is eligible for the mandatory Individual Pension System; certain conditions apply. The following people can participate provided they are under 45 years old:
- Turkish citizens.
- Employees insured under SSK who work for an employer and receive wages.
Although referred to as a mandatory system, compulsory BES is not strictly irreversible — participants can leave the program if they wish. The state treasury assigns the pension companies that will receive employer-paid BES contributions, and accounts are opened at those companies in the name of the insured employee.
The authority to determine participation in the Individual Pension System lies with the Council of Ministers. The Council designates which insured persons and employers will be included. Another important matter is the contribution rate. Announced regulations set the mandatory BES contribution at 3% of the insured person’s earnings that are subject to premiums. However, the insured may pay more than this minimum if they choose. In addition, participants may be allowed to suspend their BES contributions for certain periods if they request it.
Mandatory BES Contribution Payment Date
As known, the employer is responsible for making the employee’s contribution payments. In the Individual Pension System, the insured person’s contribution must be paid no later than the day following the employee’s scheduled salary payment day.
If the employer delays the payment or fails to pay the BES contribution altogether, the employer is financially liable for losses suffered by the insured. The Ministry of Labor and Social Security imposes fines on employers who fail to meet these obligations and comply with the regulations.
Opting Out of Mandatory Individual Pension
Designated employees are automatically enrolled in BES, but the Ministry grants enrollees the right to withdraw from the system. Insured persons may leave the program within two months from the date they are notified of enrollment. If an insured person exits the system, the mandatory BES contributions they paid are refunded to their account within 10 days.
When an Insured Employee Changes Workplace
Workplace changes are an important consideration under the Individual Pension System. If the insured’s new employer has a compatible pension plan, the employee’s accumulated savings and credited service time transfer to the new employer’s pension contract, preventing loss of accrued rights. If the new workplace does not offer such a plan, two options exist: the insured may choose to continue paying contributions under the previous contract, or the pension contract may be terminated. The employee must inform the company of their preference.
Retirement Age in the Individual Pension System
Another key topic is retirement age. Under this system, a person who has 10 years remaining is considered eligible for retirement under the condition of being 56 years old.
State Contribution in the Individual Pension System
When an insured person enrolls and does not exercise their right to withdraw, the state provides a contribution—such as a fixed amount like 1,000 TL under prior arrangements. If the insured reaches retirement and their account has accumulated at least 10 years of contributions, the state adds an additional contribution equivalent to 5% of the accumulated funds. Note that if the insured leaves the system within the first three years, they are not entitled to receive the state contribution.
If the Employer Becomes Insolvent
One common concern about the mandatory Individual Pension System is what happens if an employer goes bankrupt. Employee contributions are protected by state safeguards. Employers are not permitted to withhold or retain the payroll deductions for BES contributions in their own coffers; the funds are secured on behalf of the employee.