Participant Information Guide

Anyone with a with the capacity to act may participate in the IPS, regardless of employment, taxpayer, nationality status or age limit.

1. Can Individuals Under 18 Join the Individual Pension System (IPS)?

Yes. Under the amendment on May 25, 2021, to Law No. 4632 on Individual Pension Savings and Investment System, individuals under 18 can join the system through their legal representatives as per custody/guardianship provisions.

2. Is There a Minimum Age Limit For Individuals Under 18 in the IPS?

No, anyone can join the individual pension system, regardless of age.

3. How Can Individuals Under 18 Join the IPS?

Individuals under 18 can join the system with their legal representatives who perform transactions for and on their behalf.

Although there may be exceptions, the legal representatives are usually:

• Both the mother and father if the mother and father are married,
• The parent who has custody if the mother and father are not married,
• A court-appointed guardian if the parents are not alive or have lost custody.

Legal representatives can start a pension scheme for individuals under 18 by meeting face-to-face with a licensed individual pension intermediary through pension companies and authorized distribution channels (banks, agencies, regional offices, call centers, websites, etc.). They can also purchase individual pension contracts through distant sales.

4. What are the Additional Documents Required for Making Contracts for Individuals Under 18?

Legal representatives and/or people who will pay the contributions, if other than the legal representatives, must present ID documents when concluding the contract. The child’s guardian can enter into an individual pension contract on behalf of the child if they present a court decision regarding their appointment by the relevant authority. The guardians should also submit a permission letter obtained from the same authority to conclude a pension contract on behalf of the child under Article 462 of the Turkish Civil Code.

5. Is there a State Contribution for the Contracts of Individuals Under 18?

Yes. State contribution is the 30-percent state-paid part of the contributions, just as in other contracts. State contribution upper limit is 30 percent of the annual gross minimum wage.

6. When Can Individuals Under 18 Retire from the IPS?

Like other participants, individuals under 18 should stay in the system for ten years from the contract date and reach 56 years old.

7. Can Individuals Under 18 pay contributions themselves?

No. Only legal representatives or contributors who are specified in the contract to make payments for and on behalf of the participants can pay contributions. Contributors should not be banned or later objected to making the payments by legal representatives. The participants may pay contributions themselves after acquiring legal capacity.

8. Who Can Exercise the Rights in Pension Contracts of Individuals Under 18? Can the Exercise of Rights Be Transferred to Contributors Making Payments for and on behalf of the Participants?

The contractual rights of individuals under 18 are exercised by parents or guardians as their legal representatives. Except for the right to leave the system and to retire, the exercise of contractual rights may be transferred to contributors who make payments for and on behalf of the participants as long as contributors should not be banned or later objected to by legal representatives.

The participants are responsible for exercising their contractual rights after acquiring the capacity to act. After earning the legal capacity, the participants may transfer their contractual rights to contributors who make payments for and on behalf of them, except for the right to leave the system and to retire.

9. Is There a Separate Regulation for Individuals Under 18 on Leaving the System?

Individuals under 18 can leave the system at any time upon application through their legal representatives as per the legislation. The participants may leave the system themselves after acquiring legal capacity.

Upon leaving, the corresponding amount is transferred into an account belonging to the participant.

10. Can Pension Contracts of Individuals Under 18 Be Seized Due to Debts of their Legal Representatives or Contributors Who Make Payments for and on behalf of Participants?

No, pension savings of participants under 18 cannot be seized due to the debts of their legal representatives or contributors who make payments for and on behalf of the participants.

You can find out about the IPS through pension companies or distribution channels such as a bank, agency, regional district, call center, website, or any place authorized by pension companies.

You may participate in the system by purchasing your contract by meeting a licensed individual pension intermediary in person or through the distant sales method.

The amendments dated May 13, 2022 on the Regulation on the Implementation of the Turkish Citizenship Law allowed foreign citizens to obtain Turkish citizenship by paying contributions to the IPS. Foreign citizens may now obtain Turkish citizenship by paying at least $500,000 or equivalent in another currency in contributions to the IPS and remaining on the system for at least three years.

Foreign citizens looking to gain Turkish citizenship by paying contributions to the IPS may apply to any pension company. During the application, the below information will be submitted to the pension company:

• Governorate (Provincial Directorate of Migration) that will issue the residence permit,
• Copy of passport,
• A document that commits the signatory to stay in the system for at least three years and signed petition stating that the signatory wishes to apply for citizenship.

The citizenship pension plans available to the applicant shall not include the following:

• Entrance fee or administrative expenses fee;

Any funds that include the terms “foreign” or “foreign borrowing instruments” in the title, including those operated on the Pension Fund Trading Platform (BEFAS).

Foreign citizens included in any citizenship plan on a contract shall be unable to do the following for the first three years:

• Change plans,
• Consolidate accounts on retirement, and
• Transfer to another company

If the Turkish Citizenship application was initiated through another investment tool, it can be pursued through the IPS. To initiate this process, all necessary information and documents, including letters of conformity by the relevant public institutions regarding the previous process, should be submitted to the relevant pension company, and the previously paid amount should be verified beyond any reasonable doubt.

The Pension Monitoring Center (PMC) shall supervise to ensure that the terms (no changes of plans, no account consolidation on retirement, no leaving the system, no transfer to another company, no purchasing of funds including the terms “foreign” or “foreign borrowing instruments”) are not violated for the first three years. Any violations shall be reported to the Insurance and Private Pension Regulation and Supervision Agency (SEDDK), the General Directorate of Civil Registration and Citizenship, the Presidency of Migration Management, and the Provincial Directorate of Migration. PMC shall report contract holders meeting the above criteria at the end of the three years to the above institutions.

When choosing your pension company:

1. A. Make sure to find out about their deductions.

Your pension company may make the following deductions as part of the pension contract drawn up with you:

• A one-time entrance fee deduction at the time of contract signing or at a later date as a deferred payment,
• A management fee deduction based on your contribution payments or accumulations in the system,
• An additional management fee deduction on your accumulations in the event of non-payment of your contribution within three months following the contract payment date (as you will be considered to have suspended payments),
• A contribution holiday deduction in case the payment suspension period goes over one year,
• A total fund expense fee, including the fund management fee, to pay for fund expenses

Many of these fees vary depending on the pension company.

1. B. You must pay attention to the past income performance of pension mutual funds.

Contributions paid to the IPS by pension companies are invested in the pension mutual funds of the participants' choice. These funds contain investment instruments such as equities, government bonds, precious metals, etc. based on the fund type. Participants' income depends on the earnings or losses in the investment instruments of the preferred funds. It is always in the hands of the participants to determine the risks to take. The participants can choose either low-risk funds for a more secure investment or high-risk funds for higher-earning projections. You are recommended to examine short-, medium- and long-term past performances of your fund choices. Consider any additional benefits you may be offered.

1. C. Pay should be based on the service variety and quality offered by the pension companies.

Your pension company is responsible for giving you access to your up-to-date individual pension account information and for offering you contractual services through the call center and the corporate website. Also, it is vital for your pension company to give you sound direction when choosing the right pension mutual fund. It is also crucial to have instant access to your pension company when you need it.

Make sure that your pension company meets your expectations on service variety and quality through your chosen communication channel.

In addition, your pension company;

• additional benefits that will affect your savings, such as deduction refunds, contribution payments,
• and additional services such as credit card bonuses, free personal accident insurance, emergency health services, wrecking service, locksmith service

can provide. For this reason, it is important to consider the additional benefits that may be offered to you when choosing a pension company.

1. D. Be careful about the blocking period. 

Pension companies sign a service contract with banks regarding the payment of contributions. In accordance with the contract, by the end of the blocking period, banks transfer the money collected from participants to the pension company. The blocking period may vary from company to company.

Find out about the period between the date when your contribution payment is paid by your credit card or from your bank account and the date transferred into your individual pension account. The shorter this period, the sooner your contribution is invested and the sooner your state contribution is paid into your account.

A pension contract sets forth the procedures and principles and the parties' relevant rights and liabilities concerning:

• The opening of an individual pension account at your pension company,
• Paying contributions,
• Investing your contribution payments into your choice of funds,
• Paying the accumulations in your account to the beneficiaries

Three types of pension contracts can be drawn up:

• You can enter into an “individual pension contract” with your pension company. In this case, you and the pension company become the parties to the contract.
• You enter into a “group pension contract” with a pension company as a member of a group. In this case, your contract is associated with a group pension plan and, once again, you and the pension company become the parties to the contract.
• Your employer enters into a “noncontributory group contract” with a pension company for a group of its employees, including you. In this case, your employer pays contributions on your behalf and it may deduct this amount from the tax base by writing it off as an expense. Your employer and the pension company become the parties to the employer group pension contract.

Once your pension company is identified, the company will recommend you a pension plan.

A pension plan basically involves the following:

• The funds offered to you by the pension company,
• The contributions you will pay,
• Entrance fee,
• Management fee deduction and fund expense fee total deduction,
• Additional management fee deductions made in the event of a contribution holiday,

and related calculations and other technical rules on pension contract implementation.

When deciding on your pension plan, it pays to take into consideration the deductions in the plan and past performance of the pension mutual funds offered in the plan.

You may also inquire if the funds offered in the plan are in line with your overall investment strategy and risk behavior and if the pension company offers additional services in the plan on top of the standard services.

Entrance Fee

If you do not have another contract in effect with the same pension company, except for an employer group pension certificate, your pension company may request an entrance fee during the drawing up of the contract. The entrance fee can be paid in advance, in installments to be paid within one year at the maximum, and/or paid partially in advance and partially deferred depending on the contract expiration date or with a deferred payment depending on the contract expiration date. The entrance fee is collected only during the first five years of the contract.

Management Fee Deductions

Your pension company may withdraw management fee from your contributions or from your accumulation within the first 5 years of your contract.

Deductions for Contribution Holiday

In the event of failing to make a payment into your account within three months of the due date of your contribution payment, it will be assumed that you have suspended your payments.

• If you suspend contribution payments, an additional management fee deduction may apply to your accumulation for the suspension period.
• In the event of suspending contribution payments for one year, in addition to the aforementioned “additional management fee deduction,” the fixed costs paid to the Pension Monitoring Center with regard to your individual pension account may also be deducted from your accumulation.

Upper Limits for the Entrance Fee, Management Fee Deduction, and Deductions for a Contribution Holiday

In the first five years of your contract, the total of your entrance fee, management fee deduction, and deduction for a contribution holiday cannot exceed 8.5 percent of the monthly gross minimum wage in effect during the first half of each relevant calendar year. No such deductions shall be made for the sixth year and beyond of your contract.

In the event of terminating your contract before five years, except due to retirement or involuntary reasons, the company may apply a deferred entry fee deduction to your individual pension account accumulation in an amount that corresponds to the five-year period of your contract that has not been collected by the company by your withdrawal date.

Your pension company is responsible for ensuring that the deductions made each year in the first five years of your contract do not go over the aforementioned deduction upper limits. In the event that the upper limit has been exceeded, the excess amount shall be refunded to you within five working days.

Fund Expense Fee Total

Fund portfolio value: Calculated in consequence of appraisal of the assets in the fund portfolio pursuant to the provisions of Regulation on Amendment of the Regulation on the Establishment and Operation Principles of Pension Mutual Funds.

Total fund value: Calculated by adding other assets and receivables, if any, to the fund value and then subtracting the payables.

Net fund asset value: Total value calculated by adding cash and fund receivables to the portfolio value and then subtracting the payables.

Unit fund value: Calculated by dividing the net asset value by the number of shares in circulation.

Your pension company may apply the following based on the fund portfolio value:

• Fund management fee deduction,
• Other deductions,
  
  • Registration and publication fees,
  • Custody service fees,
  • Independent audit fees,
  • Public Disclosure Platform fees,
  • Portfolio management fees,
  • Intermediary commissions related to fund portfolio transactions,
  • Index license fees.

The fund management fee deduction is the fee paid to the pension company for fund management purposes.

Pension companies are free to set the fund management fees provided that they do not exceed the fund expense fee total. Please click to review in detail how the deduction is calculated.

The fund expense fee total is obtained from the fund assets, and as such it causes the fund income to decrease. This deduction is made daily from the fund portfolio value, not from the participant's accumulation. Total fund management fee deductions made throughout the year may exceed the fund expense fee total that can be made within the year.

The fund expense fee total is obtained from the fund assets, and as such it causes the fund income to decrease. This deduction is made daily from the fund portfolio value, not from the participant's accumulation. Total fund management fee deductions made throughout the year may exceed the fund expense fee total that can be made within the year.

For instance, if a 10-percent annual value increase occurs in the assets on which a fund with an annual fee deduction of 2.28 percent is invested, this fund’s annual return would be about 7.72 percent due to the deductions. Similarly, if a 10-percent annual value increase occurs in the assets on which a fund with an annual fee deduction of 1 percent is invested, this fund’s annual return would be about 9 percent due to the deductions.

The following table shows the maximum fund expense fee totals allowed.

The participant must assess the pension mutual fund plans according to personal preferences, fund performance and the fund management fee deduction rates.

Explanations on the table:

* According to the wording in the fund title, if more than one rate applies in the annual total fee rates in attachment 2 of the Individual Pension System Regulation, the lower rate shall apply.

For example: The title of the Gold Participation Pension Mutual Fund bears the words “Gold” and “Participation.” Attachment 2 of the Individual Pension System Regulation states the annual total fee rate as 1.09 percent for the Gold Fund and as 2.28 percent for the Participation Fund (grouped in Equity/Other Funds). Accordingly, a 1.09-percent rate must be used for this fund.

* The CMB shall be authorized to change the fund grouping with approval of the Insurance and Private Pension Regulation and Supervision Agency.

* The funds’ regular public disclosure form on the PDP must show the distribution rate of the fund management fee between the founder and the portfolio manager.

* The founder checks daily if the daily deduction rate stated in the fund bylaw is exceeded and enters it in the accounting records. If the founder determines that the accumulative calculation of the daily rates stated in the fund bylaw are exceed in comparison to the daily average fund net asset value, it shall refund the excess amount within five working days following the relevant calendar year.

Refund of the Fund Expense Fee Total

To be valid by January 1, 2021, the rates in the following table shall apply for the refund of the deduction made in the relevant year at the contract’s sixth year-end and at each following year-end. In the event of contract termination, the refund shall be made to you by the end of the fifth following working day. The contract duration shall be calculated based on the time spent in the system after January 1, 2013. Refund calculation shall not include the performance deduction by the pension mutual funds and the deductions made to pay for the necessary fund expenses.

No refund will be applied to any portion less than 1.1% of accumulation existing as of the date of deduction calculation; any deduction that reduces the deduction balance remaining after a refund below 1.1% of the accumulation will not be subject to any refund.

Please click here for an example.

Contribution

Pension companies are entitled to set a minimum amount of contribution in their pension plans. The contribution amount you will pay this way must be at least equal to the lower limit stated in your plan.

Irregular Payment

If you fail to pay your contribution within 3 months following the due date, your contract shall be considered in the irregular payment status.

In order to take your pension contract out of the irregular payment status, you may have to pay the full amount of your unpaid contractual contribution dues in one lump-sum. Pension companies may waive the contractual requirement to pay all unpaid contribution dues in one lump-sum by providing favorable benefits in their pension plans.

Beginning January 1, 2021, pension contracts with an irregular payment status will not be included in the total deduction amount refund practice.

Special Services Provided by Pension Companies / Additional Benefits

Your pension company may provide you with:

• Additional benefits such as deduction reimbursements or contribution payments that can affect your accumulations
• Or additional services and benefits such as points/bonuses paid into credit cards, free personal accident insurance, emergency health services, roadside assistance, locksmith service, and so on

Find out the coverage and expiration dates of such services and benefits provided as part of your retirement plan from your pension company.

Deduction Controls and Refunds Applicable Beginning January 1, 2021

If you terminate your pension contract in the 6th year or after, the total deduction that can be made within the scope of your contract cannot exceed the following ratio of the balance of the state contribution account associated with your contract upon the expiry date. This check will be implemented on January 1, 2021.

In the event that the upper limit has been exceeded, the excess amount shall be refunded to you within five working days.

Click here for an example.

Situations Where Deduction Refunds Will Not Be Considered Beginning January 1, 2021

The deduction upper limit associated with the state contribution to be applied beginning January 1, 2021 will not be checked

• In the case of pension contracts that are in irregular payment status as of the date of checking
• With total amount of accumulations

exceeding 10 times the annual gross minimum wage.

In calculating the amount of accumulations, the monthly gross minimum wage amount applicable in the first 6 months of the relevant calendar year shall be used.

If you are conscious about interest, you can join pension plans with the phrase "participation" in their title offered by the pension companies that operate on a participation-base or offer participation-based products, and invest in no-interest participation funds.

Participation funds complying with Islamic principles include various instruments such as gold and other precious metals, stocks complying with the participation index and participation banking principles, and no-interest securities investment funds.

You can also buy and sell participation funds offered by pension companies other than the pension company with which you have a contract, via the Individual Pension Fund Trading Platform (BEFAS).

Concluding the Pension Contract

• Contract concluded face-to-face

The agent contacting you about IPS products will brief you on the operation of the system and the rights and obligations of the parties. He or she will offer you the pension plan that meets your retirement expectations, income level and age.

The fund distribution will be determined based on your preferences. If you do not state any preferences, your accumulation will be invested in the standard funds determined by the pension company.

By accepting the proposed pension plan and signing the contract completing the “Entrance Information Form,” and the “Pension Contract Proposal Form,” you will have concluded the contract. You will be provided with a copy of each such document.

• Pension contract concluded via Internet and Call Center

You are entitled to purchase the IPS product that is right for you through the website or call center of the pension company.

The pension company will brief you on the operation of the system and the rights and obligations of the parties and offer you the pension plan proposal that meets your retirement expectations.

During the proposal phase, you will be informed about the standard fund and other funds and action will be taken depending on your preference. If you do not state any preferences, your accumulations will be directed to investments in the standard fund. You will have concluded the contract by confirming that the proposal includes the necessary information about the pension contract, the pension plan and the system, through electronic communication means (text message, electronic mail, internet, fax, and so on).

Immediately after the approval process, the “Entrance Information Form" and the "Pension Contract Proposal Form" will be sent to you either in printed form or on a permanent data store (text message, electronic mail, internet, CD, DVD, memory card and similar media or media) in line with your preferences. You will also be allowed to access these forms through a secure address on the Internet website.

• Validity of your contract

If your pension contract is not rejected by your pension company, then it will take effect on the date the first payment made as a contribution is credited to the accounts of the company after the blocking period, if any.

Your pension company is required to send you your pension contract within 10 working days of the effective date either in printed form or on a permanent data store (text message, electronic mail, internet, CD, DVD, memory card and similar media or media).

As a rule, in individual pension contracts and group pension contracts, contractual benefits are used by the participant. Except for the right to leave the system and the right to retire, the employer or other persons who pay contributions on behalf of the participant may be allowed to use the benefits under these contracts.

• You are entitled to rescind the pension product you bought (you are entitled to use your right of withdrawal during the grace period).

You are entitled to use your right of opt out during the grace period within two months of signing the pension contract proposal form or approving the proposal for distant sale.

Opt out before validity:Upon receipt of your withdrawal notice by your pension company, your previously given contribution instructions will be canceled.

Opt out after validity: The withdrawal instructions given on the working day following the receipt of your withdrawal notice by your pension company will be canceled and the accumulations in your Individual Pension Account will be refunded except for the fund total expense fees within 10 working days of the receipt of your notice by your pension company. If you withdraw after your contract enters into force, a withholding (tax) will be deducted from any income earned.

• You are entitled to determine the type of funds into which your contributions will be invested.

Twelve times a year you are entitled to make changes to the allocation ratios of the funds where your accumulations and the contributions you have paid are invested. For each fund distribution change request, you can select a maximum of 20 funds, including funds offered through BEFAS.

You can buy and sell funds from other pension companies through the Pension Fund Trading Platform (BEFAS).

Through the BEFAS Information Platform established by our institution, you can learn about various funds and evaluate and compare your options.

You can sign in to the secure page created on your pension company’s website and/or mobile application to submit your fund re-allocation request and view and select from several BEFAS funds.

You can access detailed information on BEFAS here.

Please note that you must report your fund allocation change request to your pension company at least 2 working days in advance of the change date!

Please click here for more information about pension funds.

• You are entitled to change your retirement plan.

You may change your retirement plan up to four times a year. You may forward your change request in writing to your pension company or through the pension company call center or on the company’s website. If your pension company approves your request, you will switch over to the new pension plan within 10 working days of notifying the company about your plan change request. Your new pension contract will be sent to you within 10 working days, either in printed form or on a permanent data store (text message, CD, DVD, memory card and all kinds of vehicles or media).

• You may change your contribution amount and suspend your payments.

You may change your contribution amount and payment period during the pension contract under the plan you subscribed.

However, pension companies are also entitled to set a minimum amount of contribution to their pension plans. The contribution amount you will pay this way must be at least equal to the lower limit stated in your plan.

In addition to your regular contribution payments, you may also pay any additional contributions you wish to make at any time.

Keep in mind that in many plans, lower management fees are applied for additional contributions and that no management fees are applied in some plans.

You may also suspend making contribution payments and restart them at any time. In the event of failing to make any payments to your account within 3 months of the due date of your contribution payment, it will be assumed that you have suspended your payments.

Depending on your plan, your pension company may charge you additional management fees in case of a contribution holiday.

• You are entitled to change your pension company.

In order to change your pension company, you have to stay in the pension company for at least two years from the effective date of your contract. If you have already transferred to your current pension company from another pension company, you may then change your company after staying with your current company for at least one year.

• You may leave the IPS at any time.

You may leave the system at any time within the term of your pension contract, but in this case you will not be able to fully benefit from the retirement tax benefits and the state contributions you would otherwise be earning.

When you leave the IPS, you will be paid:

• 15 percent, in the case of staying in the system for at least 3 years,
• 35 percent, in the case of staying in the system for at least 6 years,
• 60 percent, in the case of staying in the system for at least 10 years,
• 100 percent, in the case of death or disability,

of the balance in your state contribution account.

The withholding (tax) rate calculated over the return will be:

• 5 percent for participants in the system who are eligible for retirement and for participants who leave the system due to inevitable reasons such as death, disability or liquidation,
• 10 percent for participants who leave the system before becoming eligible for retirement despite of having stayed in the system for 10 years,
• 15 percent for participants who leave the system after having stayed for fewer than 10 years.

• You will be protecting your accumulations against sequestration proceedings.

With the exception of alimony payments, no collection by sequestration, encumbrance or bankruptcy proceedings shall be granted on the fund shares invested in your individual pension account, on your accumulations up to the amount calculated by multiplying the number of months you have stayed in the system and the gross minimum wage applicable at the time of collection by sequestration, encumbrance or bankruptcy proceedings and on the annuity payments you will be receiving in the event of retirement under the individual pension system.

• The amount which cannot be collected by sequestration will be calculated on the total of all balances in your accounts.
• If your account has been opened under an employer group pension contract, then the accumulations will not be included in the calculation until the end of the vesting period.

For example, assuming that a participant who has been in the system for 120 months has accumulated 3,000,000 Turkish lira and the monthly gross minimum wage on the date of foreclosure is 20,002.50 Turkish lira, then the amount of this participant's accumulations of 2,400,300 Turkish lira (120 x 20,002.50 Turkish lira) will not be sequestered.

For example, assuming that a pensioner who has retired under the IPS receives 25,000 Turkish lira per month from the annuity insurance and the monthly gross minimum wage is 20,002.50 Turkish lira on the date of foreclosure, then the 20,002.50 Turkish lira portion of the 25,000 Turkish lira paid per month will not be subject to any sequestration.

• Information on your IPS account is secured by the legislation on the protection of personal data.

Your personal information will not be shared with third parties without your consent as per the Law on the Protection of Personal Data published in Official Gazette No. 29677 dated April 7, 2016.

• You may bequest your IPS accumulations as an inheritance.

In the event of your death, your accumulations and state contributions and vested returns will be paid to the beneficiary or beneficiaries you have indicated in the contract, and if no beneficiary is defined, then to your legal heirs, without prejudice to the provisions of Turkish Civil Code No. 4721 dated November 22, 2001. (For detailed information, you can review the article titled “21. What are the actions to be carried out by the heirs of the participant in the event of death?” of this guide.)

In the event of your death, your pension company cannot collect deferred entry fees from your accumulations.

• You can save money for the future of your children.

The individual pension account offers the opportunity to build your accumulations over a long period of time. For the future of your children who are not of legal capacity, you may open up an account in your own name and assign your children as the beneficiaries.

• You can save money for the future of your close relatives.

You may open an IPS account in the name of your close relatives and pay their contributions yourself. Because the state contribution limit is determined on a per-person basis, contributions paid to your relatives’ accounts will not affect your state contribution limit. You may have your parents, siblings, spouse, children and other people you value benefit from this opportunity.

If you have high savings (i.e., if you are able to save over the contribution amount you have to pay to take full advantage of the state contribution’s upper limit, which is 240,030 Turkish lira for 2024 and you want to make the most out of the state contribution, then you may open separate accounts for yourself and your family members.

For example, if your annual savings amount for 2024 is 700,000 Turkish lira, then you may open a separate account on behalf of your spouse your child. Thus, a total state contribution of 210,000 Turkish lira would paid to the IPS accounts of you and your family members. If you have paid the said 700,000 Turkish lira into your own account as an investment in the IPS, then only 72,009 Turkish lira would have been deposited to your state contribution account.

* The gross minimum wage in 2024 is 20,002.50 TL. The annual contribution amount that has to be paid per person in order to take full advantage of the state contribution’s upper limit is 20,002.50 * 12 = 240,030 TL.

• You can keep up to date on your accumulations.

Information about your accumulations can be obtained at any time via the BES Mobile application provided by the Pension Monitoring Center or your pension company’s call center and website.

At least two years before your entitlement to your pension, your pension company will make a proposal to you allowing you to assess your transition to low-risk funds to ensure that your accumulations are less affected by financial market risks.

Within 10 working days of each accounting period, your pension company will send to your defined e-mail address or fax, and if you have not provided one, then to your postal address, an informational note about the important changes made to the legislation and to your pension plan along with an account statement.

In every quarter of the calendar year, information will be provided either through e- mail or the pension company’s website on general information about investment vehicles, up-to-date developments in financial markets, investment and performance information on the funds offered, and any investment and other financial risks that you may be exposed to.

You can easily access all your contracts with pension companies in the Individual Pension System (IPS) via the BES Mobile application.

With the BES Mobile application, you can easily access many information such as total savings in the system, State contribution amount, State contribution entitlement rate, historical development of your savings, retirement date, personalized estimated retirement income and savings amount, distribution of your savings according to fund types, risk value of your fund portfolio, your child's individual pension accounts, the accounts of your relatives to whom you inherit.

You can easily log in to the application with your e-State user profile without having to define a new username and a password. You can download the BES Mobile application to your mobile devices free of charge via Google Play and App Store.

Click to download the application to your iOS device.
Click to download the application to your Android device.

With the article 26/C of the Regulation of the Private Pension System, went into effect on September 28, 2023, it has become possible to pledge IPS savings as collateral through the transfer of receivables in the use of bank loans. Participants will be able to benefit from this opportunity after the infrastructure works are completed by pension companies and banks. All processes regarding the transfer of receivables will be carried out through the platform provided by the Pension Monitoring Center.

With this amendment, you can transfer to banks all or a part of your receivables, excluding the state contribution from your individual pension contracts, through a receivable transfer contract. However, contracts subject to administrative and legal claims regarding fund shares, such as cautionary judgment, seizure, bankruptcy and pledge, and noncontributory group contracts, contracts whose transfer or termination processes are ongoing, contracts established by transfer but not more than 6 months after the transfer, and contracts within the scope of pension income plan cannot be transferred. The transferred amount continues to be invested in the funds determined by the Board.

By the decision of the Insurance and Private Pension Regulation and Supervision Board, the transferred amount will continue to be invested in the Transfer of Receivables Fund of Anadolu Hayat ve Emeklilik A.Ş for participants who are not interest sensitive. For participants who are conscious about interest, it will be invested the Participation Based Transfer of Receivables Fund of Türkiye Hayat ve Emeklilik A.Ş.

After your loan debt is paid off, your receivable transfer contract ends, and your savings are re-invested in your preferred funds as part of your individual pension contract. If you default on at least two consecutive installments of your loan debt and do not make payment at the end of the at least 30-day period given by your bank to pay the unpaid installments, your debt will become due. If your loan debt is not paid and becomes due, the bank may request to collect the debt from the transferred receivable 30 days after the due date. In this case, your IPS contract is terminated and the remaining amount from your savings is paid to you after your debt to the bank is paid off.

In the event that a transfer contract is drawn up:

• You cannot transfer your savings to another bank before your transfer contract expires.
• You cannot terminate your individual pension contract while the transfer contract is in effect.
• You cannot transfer the savings in your individual pension account to other companies.
• You cannot make transactions regarding the funds in which the transferred amounts are invested.

Pension companies can offer you different payment tools for your contribution payments. Some of these are summarized below.

• Pay via wire / EFT

In order for your contribution payments to be made using your bank account number, you must have a defined account in the relevant bank.

• Payment by credit card

Pension companies sign a service contract with banks regarding the payment of contributions. Banks will transfer the money collected from participants to the pension company at the end of the blocking period indicated in the service contract, in accordance with the said contracts. The blocking period may vary from company to company. In this situation, the contributions you have paid will be deposited at the end of the relevant blocking period.

Amounts equal to 30 percent of the contribution payments you have made since January 22, 2022, will be paid as a state contribution into your state contribution account.

• Contributions paid by employers are not included in the state contribution calculation.
• You do not need to be a taxpayer in order to receive state contributions.
• Turkish citizens and holders of a blue card can benefit from the state contribution.

State Contribution Limit

A state contribution is paid into your account equal to 30 percent of the contributions you have paid into the IPS. However, there is an annual upper limit for this amount. A participant can benefit from the state contribution for the contribution payments up to the total amount of the gross minimum wage determined for the relevant year within a calendar year. The contribution amount to be paid in order to benefit from the 2024 state contribution upper limit is 240,030 TL. Contribution payments exceeding the aforementioned limit will be considered in the calculation of the State contribution as carryover contribution shares transferred to the company accounts on the first day of each year. The state contribution limit is calculated on a per participant basis.

State Contribution Vesting Ratios

Depending on the time spent in the system, you will be entitled to state contributions into your individual pension 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,
• 60percent, if you stay in the system for at least 10 years,
• 100 percent in the event of your death or disability

Additional time has been granted to participants who joined the system before January 1, 2013, so that it can be taken into account in calculating their entitlement periods for state contributions.

If the time spent in the system before January 1, 2013

• is more than 3 years but less than 6 years or 6 years, then 1 year,
• is more than 3 years but less than 6 years or 6 years, then 2 years,
• is more than 10 years, then 3 years will be added to

the respective contractual periods.

In order to retire, you must attain the age of 56 and have stayed in the system for 10 years from the date of your first entry into the system.

If you have more than one pension contract and you are entitled to retirement under one of these contracts, you can apply for retirement from one of the companies with which you have contracts in force.

When you apply for retirement, your pension company will send you the “Retirement Request Form,” and the “Information Form,” and send you an “Account Statement,” for you to complete. The retirement information form contains information about continuation and retirement options, as well as sample financial projections and information on the requirement of consolidation of all contracts to be able to use the right to retire.

If you request to receive the full amount of your accumulations and state contribution, then the pension company will pay you within 10 working days of receiving your request.

If you have contracts with more than one pension company, then the pension process will start after the account consolidation process is completed, except in the case of your contracts having been established under the AES. The company completes the retirement transactions within ten business days following the completion of the account consolidation.

Once you earn and use the right to retire,

• You will be entitled to request a lump-sum payment of some of your accumulations from the individual pension and state contribution accounts.
• You may also choose to stay in the IPS 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.

If you have received all of your accumulations, then you will be considered to have left the IPS.

If your contributions are paid by your employer or company, then you must wait for the length of time specified in your contract to qualify for the amount of accumulation in your account. This period varies from 0 to 7 years. The minimum entitlement rates to be applied depending on the years are as follows:

Minimum Entitlement Percentage by Contract Year (%)

Any balances in the custodial accounts of

• associations, foundations, funds,
• professional legal entities,
• and other commercial companies that have made retirement-related commitments to members or employees,

which were held since January 1, 2021, and were deposited as savings and retirement-related undertakings in Turkey or abroad, could had been transferred to the Individual Pension system fully or partially until December 31, 2023.

No entrance fees will be charged for the transfer from a participant who has signed a pension contract.

If the amount transferred in this manner and the time earned with respect to the transfer amount is less than the amount of time of the member or employee in the pension commitment plan, no state contribution can be paid for the amounts paid to the relevant pension company within one year from the effective date of the pension contract for each missing month. Accordingly, transferring members cannot leave the system for a reason other than disability or death within three (3) years of the transfer date.

In the event of the participant’s death, the beneficiary(ies) stated in the contract, or if the contract does not specify any beneficiaries, the legal heirs, may legally request from the pension company to receive the savings in the individual pension account, including all state contributions. If you do not know whether the people to whom you are a legal heir has a pension contract, or if there is a contract (IPS savings) but you do not know with which company, you may find out through the "Individual Pension Contracts Inquiry (On Behalf of the Person You Are Heir to)" service offered through the BES Mobile application or e-Government. You can inquire which pension companies the person you inherit from has a contract with by verifying your inheritance relationship by the institution from which you received the certificate of inheritance and entering the TR Identity Number of the person you inherit from. Inquiries can be made for certificates of Inheritance received from the Court - Ministry of Justice after 16/12/2016, and from the Notary - Notaries Union of Türkiye after 02/06/2021. You can get information by submitting your certificate of inheritance obtained before these dates to the PMC via the "Contact Us" page on the PMC Corporate Website.

Pension companies request the following to process the claims of the beneficiaries or legal heirs of the deceased:

• TurkStat Certificate of Death (depending on the place of death, taken from the health institution, municipal doctor, community health center, gendarmerie station commanders or village headmen),
• Certificate of inheritance (received from notary public or the relevant court),
• Form or petition prepared for the notification of death,
• A copy of the identity of the heirs mentioned in the certificate of inheritance and the Turkish lira checking account details (e.g., IBAN) registered in their name,
• Inheritance and gift tax no lien affidavit

You can contact your pension company to get the full list of documents they request.

Within 20 business days of the request for payment of the savings by the beneficiary(ies) or legal heirs, the company pays the remaining amount to the beneficiary(ies) or legal heir(s), after deducting a 5-percent income tax on the participant’s savings.

However, according to the provisions of the “Law on Restructuring of Certain Receivables and Amendment of Certain Laws” dated March 12, 2023, the heirs of the participants who died due to the earthquake on February 6, 2023, in the zones that are part of the force majeure declared by the Ministry of Treasury and Finance are exempt from income tax.

If the savings of the deceased participant are paid to their beneficiaries or legal heirs, the payment will be subject to inheritance and gift tax. You can find more on this tax in the “22. What Inheritance and Gift Taxes Apply If the Savings Are Paid to the Beneficiaries or Legal Heirs?” section of this Guide.

In case of the participant’s death, the savings and, if any, the money in the state contribution account is paid to the beneficiaries and legal heirs stated in the pension contract, without prejudice to the provisions of Turkish Civil Code No. 4721, dated November 22, 2001.

What is Subject to Tax?

During the term of the pension contract or upon the death of the participant who is entitled to retirement, his/her savings and state contributions, if any, are subject to the inheritance and gift tax. Accordingly, an income tax of 5 percent will be withheld on the income earned by the deceased participant, and the remaining portion will be subject to inheritance and gift tax. After the deduction of the tax exemptions, the portion that is passed on to the heirs or beneficiaries at the relevant inheritance shares will be taxed according to the rates determined in the tariff.

What is a Taxable Event?

It refers to the gratuitous acquisition of the value determined by the individual pension and automatic participation system by the beneficiaries or legal heirs through inheritance (succession) or other means during the term of the pension contract or upon the death of the participant who is entitled to retirement.

According to individual pension contracts, after the natural or accidental death of the insured, the insurance company must do the following:

• The amount of savings paid to the heirs must be included in the estate through inheritance;
• If the insured designated a non-heir third party as the beneficiary, the savings amount to be paid to the beneficiary must be considered as a gratuitous acquisition;

After being taxed as an earning on movable assets pursuant to Article 75 of the Income Tax Law, the amount must be subjected to the inheritance and gift tax.

Who is the Taxpayer?

During the term of the pension contract or upon the death of the participant who is entitled to retirement, the legal heirs acquiring by inheritance or, in case the employee has appointed a third person who is not an heir as the beneficiary, the beneficiaries acquiring property gratuitously.

Additionally, the participant may choose to register his/her legal heirs as beneficiaries of the individual pension contract. In the event of a donation of goods to a person from his/her mother, father, spouse and children (except for donations from the adopted to adopting parents), the tax is calculated by applying half of the rates in the tariff regarding donations.

What is the Tax Base?

During the term of the pension contract or upon the death of the participant who is entitled to retirement, the taxpayers who have made out their inheritance and gift tax declarations due to the savings inherited or donated to them will determine the basis of the inheritance and gift tax for the first assessment in accordance with the values in the Tax Procedure Law of the gifted wealth. The tax base is obtained by subtracting the exemption amount determined by hereditary transmission or donation from the total of the assets acquired.

Accordingly, upon the death of the person participating in the individual pension system, the tax base to be calculated for his/her savings (contribution, contribution margin, state contribution and state contribution margin) will be the current value of the assets subject to donation, which is the basis of the tax assessment on the day of the taxable event.

The various debts and expenses that can be deducted in determining the inheritance and gift tax base are as follows:

• Debts and tax debts of the testator based on valid documents in the case of hereditary transmission;
• Debts incurred in relation to the property and tax debts in gratuitous acquisitions (if the donator undertook the debts related to the donated goods, these debts are not deducted);
• Debts transferred from the goods belonging to persons who are citizens of the Republic of Türkiye to those in foreign countries, and inheritance and gift taxes paid due to these goods in foreign countries (the aforementioned debts and taxes cannot exceed the value of the declared goods);
• Obituary expenses paid to the newspaper by the heirs for the funeral, burial and obituary.

For these debts and expenses to be deducted in the determination of the tax base, it is obligatory for the taxpayers to show them in the relevant section of the declaration and attach the relevant documents to the declaration.

What is the Tax Rate?


The tax tariff is arranged based on double tariff for inheritance and donations, with a double incremental rate. There are increasing rates for donations in one part of the tariff and increasing rates for inheritances in the other. On the other hand, the increasing proportionality regarding the bases exceeding the amount in the last bracket is turned into a fixed rate.

The tax base brackets of the tax tariff are applied with annual increases at the revaluation rate determined in accordance with the Tax Procedure Law based on the previous year. Fractions that do not exceed 5 percent of the brackets calculated in this manner are not taken into account. The President is authorized to increase or decrease these determined amounts by half.

(The tariff changed as of January 1, 2023 with the General Communiqué on Inheritance and Gift Tax Law No. 54)

However, according to the provisions of the “Law on Restructuring of Certain Receivables and Amendment of Certain Laws” dated March 12, 2023, the individual pension savings hereditarily transmitted to the heirs of the participants who died due to the earthquake on February 6, 2023 are exempt from inheritance and gift tax.

Where is the Declaration to be Submitted?

For the legal heirs of the participant or his/her appointed beneficiaries, after receiving the inheritance tax declaration and the certificate of inheritance during the term of the pension contract or upon the death of the participant who is entitled to retirement;

• Declarations can be submitted from the interactive tax office website by logging in with the information of any of the heirs.
• In hereditary transmissions, the declaration is submitted to the tax office where the domicile of the deceased is, while in donations, the declaration is submitted to the domicile of the person who accumulated the savings.
• In case the savings were accumulated by legal entities or other entities, the declaration is submitted to the tax office where the headquarters of the said legal entities or other entities are located.
• If the residence of the legator or the person who accumulated the savings is in a foreign country, the declaration is submitted to the tax office in the location of his/her last official residence in Turkey.
• Taxpayers in foreign countries submit their declarations to Turkish consulates.
• If the testator or the person who accumulated the savings has never resided in Turkey or the last residence cannot be determined, the inheritance and gift tax returns must be submitted to the tax office in the location of the property hereditarily transmitted or otherwise donated or in the location where the taxpayers reside (all assets transferred from the testator must be declared in this declaration).

Declarations can be made to the relevant tax offices in person or sent via registered mail.

When is the Declaration Submitted?

Hereditary Transmissions in General

During the term of the pension contract or upon the death of the participant who is entitled to retirement, the legal heirs of the participant will submit their declarations on the following dates:

• If the participant’s death occurred in Türkiye and the liable parties are also in Türkiye, the declaration is submitted within four months following the date of the participant’s death;
• If the participant’s death occurred in Türkiye and the taxpayers are in a foreign country, the declaration is submitted within six months following the date of the participant’s death;
• If the participant’s death occurred in a foreign country and the taxpayers are in Türkiye, the declaration is submitted within six months following the date of the participant’s death;
• If the participant’s death occurred in a foreign country and the taxpayers are in the same foreign country, the declaration is submitted within four months following the date of the participant’s death;
• If the participant’s death occurred in a foreign country and the taxpayers are in a different foreign country, the declaration is submitted within eight months following the date of the participant’s death;
• In case of absence, the declaration is submitted within one month following the date of registration of the decision of absence in the death registry.

Non-Hereditary Donations

During the term of the pension contract or upon the death of the participant who is entitled to retirement, the beneficiaries appointed by the participant submit their declarations within one month following the legal acquisition of the savings, and if any, the amounts in the state contribution account.

Which Documents Are to be Attached to the Declaration?

• TurkStat Certificate of Death (depending on the place of death, taken from the health institution, municipal doctor, community health center, gendarmerie station commanders or village headmen),
• Certificate of inheritance (received from notary public or the relevant court),
• Form or petition prepared for the notification of death,
• A copy of the identity of the heirs mentioned in the certificate of inheritance and the Turkish lira checking account details (e.g., IBAN) registered in their name,
• Inheritance and gift tax no lien affidavit.

How is the Tax Assessment Performed?

During the term of the pension contract or upon the death of the participant who is entitled to retirement, there is a two-stage assessment in the inheritance and gift tax to be paid by the legal heirs and/or the beneficiaries appointed by the participant. These are as follows:

• Tax is levied on the tax return submitted by the taxpayers within 15 days by the tax office. This assessment, which is made on the declaration of the legal heirs and/or the beneficiaries appointed by the participant, is temporary as it is an “initial assessment.”
• Valuation errors made by the legal heirs and/or the beneficiaries appointed by the participant in the declaration are corrected by the tax office by applying the correct valuation criteria in the “final assessment.”

How is the Tax Paid?

Inheritance and gift tax is paid in three years from the date of accrual and in two equal installments in May and November each year, totaling six installments.

• The tax can be paid from ivd.gib.gov.tr or via the GİB mobile app, either by logging in or without logging in to the Interactive Tax Office by choosing the “Payment by Document Number” option under the Quick Payment options:
  • With the credit cards in the contracted banks;
  • From the debit cards or bank accounts in the contracted banks;
  • Banks operating in foreign countries: with credit cards, debit cards and other payment methods;
• Contracted banks;
  • Branches;
  • Alternative payment channels (Internet Banking, Telephone Banking, Mobile Banking, etc.);
• PTT branches;
• All tax offices.

Which Amounts Are Exempt?

The taxpayers can deduct the documented debts of the deceased participant, the expenses incurred for the funeral equipment and curation, tax debts, as well as the amounts donated to the beneficiary and the amounts and tax debts related to these amounts from the tax base of the amounts they are entitled to.

• For beneficiaries, 23,387 Turkish lira of donations will be exempt from tax in 2023.
• For legal heirs, 1,015,747 Turkish lira of the inheritance shares belonging to each of the descendants and spouses, including the adopted, from the properties with values determined according to Article 10 of the General Communiqué on Inheritance and Gift Tax Law will be exempt in 2023. In the absence of any descendants, 2,032,742 Turkish lira of the inheritance share belonging to the spouse will be exempt from tax in 2023.

What is the Inheritance and Gift Tax Situation for Those Receiving State Contributions?

According to subparagraph (o) of Article 4 of the General Communiqué on Inheritance and Gift Tax Law titled “Exemptions,” the vested portion of the state contributions made to the individual pension account under the Individual Pension Savings and Investment System Law No. 4632 dated March 28, 2001, are exempted from the inheritance and gift tax. It’s important to note that this regulation concerns the participants. If the part of the state contributions that the beneficiaries or legal heirs are entitled to is paid to them and they exceed the exemption limit, they will have to pay inheritance and gift tax.

A 5-percent deduction is made from the savings and state contributions of the participants who leave the system due to the amount of income included in the payments made to those who leave due to compulsory reasons such as death. In this case, since the duration of the participant’s stay in the system is not taken into account, the legal heirs and/or beneficiaries can be entitled to all of the state contributions of the deceased participants.

In the event of death, if you do not know whether the people to whom you are a legal heir have pension contracts or whether such contracts exist, but you do not know with which company, you may send your request to the PMC via the Contact Us page with a copy of your certificate of inheritance.

CASE - 1

Contribution Amounts: 40,956.49 TRY

• Contribution: 35,195.80 TRY
• State Contribution: 5,760.69 TRY

Fund Returns: 10,296.72 TRY

• Contribution Return: 8,746.37 TRY
• State Contribution Return: 1,550.35 TRY

Total Savings: 51,253.21 TRY


1. If the participant has passed away and the spouse is the sole heir:

(Note: It is assumed that the participation receivables are determined with the division of matrimonial property, which is the priority legal transaction.) 35,195.80 TRY + 5,760.69 TRY = 40,956.49 TRY, no tax calculated on this amount. 8,746.37 TRY + 1,550.35 TRY = 10,296.72 TRY x 5% = 514.83 TRY (income tax amount) 10,296.72 TRY - 514.83 TRY = 9,781.89 TRY will be the net return. Amount Exempt From Inheritance and Gift Tax: 2,032,742 Turkish lira for the inheritance share of the spouse in case there are no inheriting descendants for the year 2023. Inheritance and Gift Tax Base: 0 TRY Inheritance and Gift Tax Payable: 0 TRY Amount left to the inheriting spouse: 40,956.49 TRY + 9,781.89 TRY =50,738.38 TRY.

2. If the participant has passed away and assigned another person as beneficiary with an inheritance contract:

35,195.80 TRY +5,760.69 TRY = 40,956.49 TRY, no tax calculated on this amount. 8,746.37 TRY + 1,550.35 TRY = 10,296.72 TRY x 5% = 514.83 TRY (income tax amount) 10,296.72 TRY - 514.83 TRY = 9,781.89 TRY net return. 40,956.49 TRY + 9,781.89 TRY = 50,738.38 TRY Amount left to the person assigned as beneficiary with an inheritance contract; 50,738.38 TRY - 23,387 TRY = 27,351.38 TRY IGT (inheritance and gift tax) base 27,351.38 -TRY x10%= 2,735.138 TRY Amount left to the beneficiary: 50,738.33 TRY - 2,735.138 TRY = 48,003.242 TRY.

CASE -2

The participant passed away on January 2, 2023. The heirs did not disclaim the inheritance within three months. The amount of savings of the participant: 2,500,000 Turkish lira. (Note: Firstly, it was ensured that the assets belonging to the deceased participant and the living spouse were determined, and that the goods that were determined to belong to the living spouse as a result of this division were not declared in the inheritance and gift tax return; income tax was withheld, and the reserved share of the spouse was preserved.)