What is the Complementary Pension System? Who Does It Cover? The Complementary Pension System, a matter of close interest to employees, was announced to be implemented in 2022 following the cabinet meeting chaired by President Recep Tayyip Erdoğan. According to the statement by President Erdoğan, the Complementary Pension System will come into force in 2022.
After the cabinet meeting, President Erdoğan explained the details of the Employment Shield Package one by one. As part of this package, a new pension model that directly affects workers will be introduced. Erdoğan stated that the Complementary Pension System will be launched in 2022 and that incentives will be provided to encourage additional employment. He noted that the system will be established with the consensus of social partners. Those who have just started working and will have a very long time until retirement, as well as workers who are close to retirement, will not be included in the CPS.
How Will the Complementary Pension System Work?
How will the Complementary Pension System operate? The Complementary Pension System will be implemented based on agreement among social partners. New hires who will have a long working life ahead of them will not be included in the system. Likewise, those above a certain age and those nearing retirement will be excluded. If you want to know who will be covered by the Complementary Pension System and how it will be administered, read on for the details.
- The automatic individual pension scheme, which began in 2017, will be converted into the Complementary Pension System (CPS).
- All employees will be enrolled in the CPS on a mandatory basis.
- Contributions will be deducted from employees’ salaries, and employers and the state will also provide contributions.
- A contribution formula will be designed so as not to increase the existing burden on employers; using the unemployment fund to provide contributions is one of the options under consideration.
- Contribution rates will be proportional to earnings: lower deductions for lower wages and higher deductions for higher wages.
- Each employee will have a CPS account where all deductions accumulate.
- As with severance pay, employees will not be able to withdraw from CPS at will; exit rights may be introduced gradually. Workers will be able to leave the system when they retire.
When Will the CPS Start?
When will the CPS begin? According to current plans, the Complementary Pension System will be launched in 2022. The mixed model to be established is intended to protect workers’ acquired rights. Announcements indicate that complementary pension insurance will enable additional retirement support to be provided. President Erdoğan stated that the measure aims to ensure that employees live comfortably after retirement. Through the fund created under this scheme, the goal is to make Turkey’s Employment Shield sustainable over the long term.