Voluntary Participation (IPS) Auto Enrollment System (AES) Funds Legislation Data Center

What is AES?

Employers shall be obligated to enter employees in the Auto Enrollment System (AES) pursuant to the provisions on automatic participation of the Individual Pension Savings and Investment System Law No. 4632, which entered into effect on January 1, 2017. Accordingly, employers shall send to the system at least three percent of the premium-based earnings and of the pension deduction-based salary for the private sector and the public sector, respectively. Employees shall have the right to stay in this system for as long as they wish. The AES shall apply to Turkish citizens or Blue Card holders who have not turned age 45 and who work as a salaried employee in the public or private sectors (employees that fall within the scope of articles 4a and 4c of the Social Insurance and General Health Insurance Law No. 5510 and that participate in the funds established as per supplementary article 20 of the Social Security Law No. 506). By remaining in the system, the employees that are automatically entered in the system shall get an additional income on top of the pension income from the social security system.

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The IPS aims to do the following:

  • Increase the level of wealth by providing an additional income through investment of employee's pension savings,

  • Create a lasting source for the economy,

  • Boost employment, and

  • Contribute to economic development.

Entered into force pursuant to the law, the AES, like the voluntary IPS, runs on the principle of savings collection and investment and then making a lump-sum payment or regular payments to the individual. This system does not offer the health or other services provided by the Social Security Institution. The AES is a supplement and not an alternative to the compulsory social security system.

Rules that are similar to those of the IPS apply to the AES, which uses the infrastructure of the voluntary IPS. Click for the difference in these systems.

An amount that equals 25 percent of the contributions made by deducting from your salary shall be entered in your automatic participation account. The state contribution paid to a participant cannot exceed 25 percent of the total gross minimum wage for that year.

Also, when you enter the system for the first time, a one-time 1,000 Turkish lira additional state contribution shall be paid into your account.

You shall be entitled to the amounts in your automatic participation state contribution account in the following ratios:

  • 15 percent, if you stay in the system for at least 3 years,

  • 35 percent, if you stay in the system for at least 6 years,

  • 60 percent, if you stay in the system for at least 10 years,

  • 100 percent in the event of retirement, death or disability.

The employees in the automatic enrollment system shall be obligated to identify and enter into a contract with at least one pension company authorized by the Ministry of Treasury and Finance. When deciding on the pension company, the employer shall take into account service quality, employees' demands, employee benefits, the fund management fee deduction rate, and the performance by the pension company and the relevant funds. You shall be entered into the system with the certificate issued in your name as part of the contract. It shall be up to you to decide on the funds for your contributions to be invested in. The system offers interest and non-interest fund choices. If you do not use your right to select, the employer shall decide on the funds to invest your contributions. A maximum of 0.85-percent annual fund expense fee total shall apply for all funds offered to the employees. No other deduction shall apply to the funds except for the fund expense fee total.

The contributions that your employer deducts from your salary and transfers to your automatic enrollment account in the pension company shall be invested in the pension mutual funds without being subject to any deduction. Portfolio managers shall manage the fund portfolio. Istanbul Settlement and Custody Bank Inc. shall keep the assets in your portfolio in a secure manner. You can keep instant track of your accumulations from your pension company or from Istanbul Settlement and Custody Bank Inc.

Following the initial period, you can suspend contribution payments and begin making payment anytime you wish, while remaining in the system.

In order to retire from the AES, you must stay in the system for 10 years from the first date of entry into the system and have attained the age of 56. After meeting these conditions, you may stay in the system and continue paying contributions to grow your savings even more.

Once you earn and use the right to retirement,

  • You shall be entitled to request a lump-sum payment of some of your accumulations from the individual pension and state contribution accounts.

  • You can also choose to stay in the AES and receive your accumulations in part from the pension company according to the reimbursement plan you decide.

  • You may earn regular income by purchasing an annuity with some or all of your accumulations.

While you are exercising your right for retirement; if you purchase an annuity product for at least 10 years, you shall earn the right for a state contribution that equals five percent of your accumulation amount.

You can leave the system anytime by withdrawing your accumulations. If you leave the system, the pension company shall deduct income (withholding) tax on the payments due to you based on your accumulations. The withholding tax deduction rate is as follows:

  • Five percent for vested participants in the system and for participants who leave the system due to reasons such as death, disability or liquidation,

  • Ten percent for participants who leave the system before becoming vested for pension despite having stayed in the system for 10 years,

  • 15 percent for participants who leave the system after having stayed for fewer than 10 years.

The AES shall be audited, overseen and supervised by the Ministry of Treasury and Finance, the Capital Markets Board of Turkey, the Pension Monitoring Center, the Istanbul Settlement and Custody Bank and independent audit companies to ensure transparency and security.

Please click for the Employee Information Guide for more information on the Automatic Enrollment System (AES).

Following gradual transition shall apply when automatically including the private sector employees in the individual pension system:


(*) number of employees at all businesses shall be counted. In addition, the number of employees shall be determined based on the most recent Social Security Institution data.



Gradual transition for the public sector:


Please click for the Employers Information Guide for more information on the Individual Pension System (IPS).