Automatic Enrolment System (OKS)

Private Pension Auto Enrollment System put into effect as of 1st of January 2017 aims to provide an additional income to the employees in addition to pension income provided by social security system and to raise the awareness of national savings. This system, which intends to increase the number of participants in private pension system and to spread the saving fact to large masses, is applied in many countries such as USA, England, New Zealand, Italy etc.

• Turkish citizens and Blue Card holders,
• Persons under age 45,
• Public sector employees (4C) (All public sector employees will be included regardless of the number of employees),
• Private sector employees * (4A) (Private sector employees will be included in the system taking into account the number of employees in the workplace to be determined by the Council of Ministers),
• As per “Press Statement” dated 21.12.2016 published by T.R. Prime Ministry Undersecretariat of Treasury, gradual transition dates are as follows:

Every employer involved in the Auto Enrolment system is obliged to contract with a pension company on behalf of its employees and to include employees who meet the criteria in the legislation.

To allow their employees to be included in the system, the employer shall report all necessary information pursuant to law and sub-regulations to the pension company and forward this monthly data to the pension company. The employer shall deduct from the salaries of the employees a minimum 3% of premium based earnings or monthly pension deduction based pay and this amount shall be transferred to the pension company no later than the following business day after the date of payment of the employee's salary.

The business day following the date on which the first contribution payment deducted from the employee pay transferred to the pension company's account in cash, it is reported to the employee by the pension company, which has involved them in a pension plan under an automated Enrolment. The employee has right of withdrawal from the contract within 2 months following the date of this notification. In this case, contributions paid by the employee until that date and employee's investment income, if any, will be returned to the employee. If the employee wishes to leave the system after the end of the withdrawal term, the leaving rules in the individual pension system will be effective

Employee contribution shall be the amount corresponding to minimum 3% of the premium based earnings or monthly pension deduction based pay. Employees should inform their employer if they wish to pay higher amount of contribution.

Employees cannot pay additional contribution or make lump sum payment other than the amount deducted from his/her pay.

• State contribution at the rate of 30% of the contribution paid by the employee (Maximum state contribution for the year 2024 is 72.009,00 TL.)
• If they prefer to stay in the system at the end of the 2-month withdrawal term, the initial state contribution in the amount of 1000 TL
• Supplemental state contribution up to 5% of the saving of the employees who prefer to receive their savings in the retirement period as 10-year annuity insurance

The state contribution upper limit for contracts under the scope of Auto Enrollment will be calculated separately from the state contribution limit of the PPS contracts. For example, state contribution in the amount of maximum 72.009,00 TL is calculated for PPS contracts out of Auto Enrollment scope for the year 2024 while a further state contribution in the amount of maximum 72.009,00 TL is calculated for the contracts under Auto Enrollment scope.

State contribution incentive at the rate of 30% and initial state contribution in the amount of 1.000 TL have the same vesting period as indicated in below table (Same as the periods and rates in PPS.)

Within the scope of Auto Enrollment, employees do not pay any entrance fees or any deferred fee or payment in case of leaving the system. As long as they are participants in the system, no deduction is made by pension companies other than the Fund Management Fee (FMF) over the employees' savings in the pension account. The maximum annual Fund Management Fee rate is applied as 0.85% for all funds offered to employees who are included in the private pension system through their employers under Auto Enrolment. In accordance with the legislation, the Total Fund Expenditure Fee, including the FMF, in pension mutual funds offered under Auto Enrolment cannot exceed maximum 1.09% per year.

In the event that the employees fail to make preference of interest or interest-free fund, the fund preference declared by the employer shall be valid. In this context, the contributions are firstly directed to "Initial Funds" stated in the plan in accordance with the preference made. Contributions will be used under the "Initial Fund" until 01.07.2016, after which the risk profile survey is presented to the employees who prefer to leave from this fund without any binding result. Contributions and savings are directed to investment through funds/fund groups at different risk profiles presented in the preference of participant. If the customer does not make any changes, it will be automatically transferred from the "Initial Fund" to the "Standard Fund" at the end of the first year. A risk profile survey will be presented to the participants who prefer to leave the standard fund without any binding result.

Employees can change the fund distribution 12 times a year.

Employers are entitled to enter into agreement with a pension company approved by the Undersecretary of the Treasury on behalf of their employees.

An automatic enrollment contract will be opened for the employee under each employer involved in Auto Enrollment system.

If the employee leaves the job, all the transactions will be made directly with the pension company.

The savings in private pension plan and the state contribution paid, if any, of an employee who has been included in the private pension system and still active in the system as of the date of job change shall be transferred to the plan of the new company and the term to entitlement to pension and the term to entitlement to government contribution shall be protected exactly in the plan of the new company.

When an employee changes job and if the new employer has no pension plan under Auto Enrolment, the employee can continue the existing pension plan. In this case, the employee makes the payments himself/herself (through credit card, bank account etc.) to the pension company with which Auto Enrolment contract is executed. If the new employer has no pension plan under Auto Enrolment and the employee does not wish to continue to pay the contribution, he/she will be excluded from the relevant pension contract. The employee is obliged to notify the pension company of his request to continue to pay contribution until the end of the month following the job change

Yes, all the employees who are eligible to join Auto Enrollment system will be included in the system.

No, a new contract will be initiated with Auto Enrollment. Current PPS contracts will continue separately.

The pension and state contribution based periods under Auto Enrollment system cannot be combined with the pension and state contribution based periods under other PPS contracts.

Employees who have participated at least 10 years in Auto Enrollment system and who complete 56 years of age are entitled to pension.

• State contribution at the rate of 30% regularly paid to his/her account
• Initial state contribution in the amount of 1.000 TL
• In the event of exercise of pension right, supplemental state contribution at the rate of 5% of the saving of the employees who prefer to receive their savings in the retirement period as 10-year annuity insurance

Employees can receive their savings as:

• Lump-sum payment
• Programmed repayment: Employees receive their savings as pension, the amount of which is determined by themselves, and payments continue until their savings end.
• Annuity *: Employees receive their savings as life-long pension. *Those who prefer this option can benefit from additional state contribution up to 5% of their savings.