Recent development
In an effort to boost domestic saving rates and to increase employee welfare, on August 25, 2016, the Private Pension Law was amended to include the automatic enrollment of employees to the private pension system. The changes are set to take effect on January 1, 2017.
What the law says
Conclusion
After a decade of extensive discussions, Turkey will implement the auto-enrollment of employees to pension plans. This flexible program, which includes an opt-out option for employees, also offers a 25% government contribution and favorable taxation. As a country characterized by low savings rate that has not kept up with the pace of the economic growth of the country, resulting in an increasing gap between savings and investments, the private pension auto-enrollment will play a crucial role in increasing savings and capital markets depth. Employers must ensure that they fulfill and comply with these new statutory responsibilities in order to provide their employees with adequate retirement solutions.
Please contact us if you have questions about how these changes might affect your company.