Celergo would like to inform you of a Benefits Legislation change in Turkey that will have an impact on payroll. In November 2016, the Prime Ministry Circular on Automatic Participation in the Individual Pension System (BES) was published in the Official Gazette, numbered 29900. The automatic participation to BES, also known as “Compulsory Individual Pension,” will come into effect as of January 1, 2017.

There are new duties on employers to help more people save for their retirement. As an Employer you will be required to:
• Agree with one or more pension companies authorized by the Under Secretariat of Treasury to regulate the pension plan for
automatic participation.
• Determine the authorized officers for the signature of the pension contract on behalf of the central and/or provincial units.
• Present a retirement plan to the employees covered by the law and should transfer the withheld employee contributions to the
retirement company.

All institutions that employ five (5) or more employees will be gradually included in automatic participation.
• As of January 1st, 2017, enterprises with 1,000 or more employees.
• As of September 1st, 2017, with 100-249 employees.
• As of January 1st, 2018, enterprises with 50-100 employees and all local administrations.
• As of July 1st, 2018, enterprises with 10-50 employees.
• As of January 1st, 2019, enterprises with 5-9 employees.

Below are some common questions and answers to help you better understand the impact of this change:

1. The Government is mandating that all Employers set up a Pension Scheme for their employees to be automatically enrolled in,
correct? Prior to this change, a pension scheme was a voluntary benefit.
Answer: Yes, correct. According to the new regulation employers with the number of Employees indicated above will be enrolled on the respective date.

2. Can Employees Opt out?
Answer: Yes. When the company enrolls, all employees should be enrolled at the same time. Employees can opt out after two months with consent; therefore, the amounts that were deposited on, behalf of the employees by the employers, will be paid back to the employees by the insurance company.

3. Will Employers receive a notice of their pending deadline from the government on the enrollment?
Answer: No. The employers will need to notate their pending deadline. If they do not participate at that time, they will be subject to administrative penalties that are imposed by the Ministry of Labor and Social Security.

4. How far in advance will you need to notify your Payroll Provider to set up the pension deductions via payroll?
Answer: The pension deduction will be on the calculated from the SGK base. The fixed rate of 3% will be calculated on SGK base to be deducted from the net salary via payroll. They will need confirmation that you as the employer have an agreement with an insurance company by the time your deadline has approached.

Celergo highly recommends that you start looking into setting up a Pension Scheme way in advance of the stated deadlines.

Employer alerts are provided by Kira Rubiano, Sr. Partner Management Specialist – Europe/Asia Pac.