DEDUCTION REFUND AND ADDITIONAL BENEFIT PRACTICES
Deduction Refund
Pursuant to the second paragraph of Article 22/A of the Regulation on the Individual Pension System, if the contract is terminated on its sixth year or later, the permitted deduction amount (entrance fee, administrative expense fees, and fund expense fee total) from the contract effective date cannot exceed the annually set amount in the Regulation that is a percentage of the state contributions in the contract account. Otherwise, the exceeding amount will be refunded to the pension account.
This control and refund process is not performed for the participants who have directed all or a part of their accumulations to a fund or funds traded on BEFAS. The below example demonstrates the calculations for a contract in which the participant invests in their pension company’s funds and for a contract in which the participant opts for the funds of other pension companies via BEFAS.
Pursuant to the third paragraph of Article 22/A of the Regulation on the Individual Pension System, the fund expense fee total that is made as per the contract is refunded to the individual pension account of the participant in rates set by the Regulation, commencing from the contract’s sixth year.
While calculating the deduction amount to refund, only the funds of the company with which the participant has a contract is included. Additionally, the fund expense fee total of the funds purchased from other companies via BEFAS is not included in the calculation.
The below example demonstrates the calculations for a contract in which the participant invests in their pension company’s funds and for a contract in which the participant opts for the funds of other pension companies via BEFAS.
(*) It is assumed that the accumulation in its entirety has been invested in the funds traded on BEFAS.
Pension companies inform their participants, with whom they hold a pension contract or certificate, who wish to select the funds founded by other companies on BEFAS about the above-mentioned issues and obtain their approval.
Additional Benefit Practice
Additional benefits remain unchanged for the plan and contract signed by the participant who preferred the funds traded on BEFAS. In the plans where the refund of the fund management fee deduction is offered as an additional benefit, this refund may not be made if the participant opts for the funds of another company via BEFAS.
(*) It is assumed that no refund has been made for the contract in which the participant invests in the funds of other companies via BEFAS.