What are the Pension Funds?

What is the objective of the Private Pension System?

Private pension system is a voluntary based scheme established as complementary to the current national social security organisations such as Social Insurance Institution ,Pension Fund, BAĞ-KUR for contributing individuals to raise their welfare level in their retirement with an additional income.

What are the conditions for participating in the system?

.People who are entitled to enjoy civil rights can participate in the private pension system. There is no other requirement in laws for participation.

What are the investment options of participator?

Contributions will be invested in pension funds that are established by pension companies . These funds may invest in various monetary and capital market instruments including local or foreign stocks, repo, treasury bonds, government debentures, deposits. The pension company is obliged to create at least 3 funds having different risk and return structures. Each of these funds has to include in its portfolio a certain monetary or capital market instrument at a ratio of not less than 80% and designate the fund’s name to reflect the content of the portfolio.

For example, if the pension company creates a "Public Borrowing Instruments Fund", at least 80% of this fund portfolio will be invested in government internal borrowing bonds/bills including reverse repo. If the pension company creates a "Equity Fund", at least 80% of the fund portfolio will be invested in stocks of companies traded in the Stock Exchange. If the investor is a person eager to undertake risks and consequently to obtain high income, contributions will be directed to the Equity Fund intensively or, on the contrary, if the investor is a person avoiding risks and preferring to obtain a balanced income, then contributions will be directed to a fund dominated by internal borrowing bonds.

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Can a participant change the company or funds if (s)he is not satisfied?

Participants may change pension plans four times in a year or the allocated rates or amounts of your contributions between funds six times in a year. Participants may transfer your accumulated savings to another pension provider after one year from the effective date of current pension agreement. All rights that the participant has from the date of participation in the system shall be maintained in new pension-company transferred. 

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What are the conditions for eligibility for retirement?

To retire from the private pension system, participants must remain in the system for at least ten years and be over 56 years of age. The condition of remaining in the system for ten years will be satisfied if the participant pays the minimum contribution for a period of ten years or pays a total amount which corresponds to payment of minimum contributions for ten years within the scope of pension plans, provided that the participant remains in the Personal Pension System for a period of ten years following the date of effect of the first pension contract without recovering the accumulated funds.

In order to eligible for personal pension under all pension contracts, the participant must be entitled to retirement under at least one pension contract.

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