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

People who are entitled to enjoy civil rights can participate in the individual retirement scheme. There is no other requirement in laws for participation

The scheme obligates the availability of advisories holding licence to this effect to assist people in selecting the right investment option according to their own preferences and explanation of risk, advantages and disadvantages of each investment option in detail in prospectuses and guides. Information about the pension-company and fund shall be presented to participator by means of documents such as monthly, quarterly and yearly reports and representations in certain periods.

For example, a document called "risk-revenue profile form" shall be issued for giving information about the fund where the money deposited by the person shall be invested. Before making investment in the fund, the participator shall complete and sign the risk-revenue profile form, which is an obligation of the pension-company to issue for determining the risk-revenue profile of the participator, and s/he make his/her decision on investment in accordance with the recommendations given to him/her according to the information obtained from the form. Although the participator is not obliged to act in accordance with the recommendations for investment, the guidance to participators is mandatory for the pension fund..

This form shall basically contain the ID particulars of participator, maturity of investment, expectation of revenue on the basis of risk the participator consents, special preferences for the management of his/her investments, his/her experience in investment, fund options to be offered to the participator, risk and revenue details that may help the participator to make his/her investment decision.

The scheme obligates the availability of advisories holding licence to this effect to assist people in selecting the right investment option according to their own preferences and explanation of risk, advantages and disadvantages of each investment option in detail in prospectuses and guides. Information about the pension-company and fund shall be presented to participator by means of documents such as monthly, quarterly and yearly reports and representations in certain periods.

For example, a document called "risk-revenue profile form" shall be issued for giving information about the fund where the money deposited by the person shall be invested. Before making investment in the fund, the participator shall complete and sign the risk-revenue profile form, which is an obligation of the pension-company to issue for determining the risk-revenue profile of the participator, and s/he make his/her decision on investment in accordance with the recommendations given to him/her according to the information obtained from the form. Although the participator is not obliged to act in accordance with the recommendations for investment, the guidance to participators is mandatory for the pension fund.

There is a provision in the regulations governing the pensions funds on this matter. According to his provision, "participators are obliged to invest maximum 15% of their premiums in the funds with maximum 80% foreign money and securities and minimum 30% of their premium in the funds with minimum 80% public debentures funds, including reverse repurchase; and the pension-company is obliged to take actions for guiding the participators to invest their premiums in this nature of funds." Accordingly, 100% of premiums cannot be invested in foreign funds or stock funds.

The pension-company shall determine the minimum premium so as to include the management and fund operation of the pension-scheme in which the participator is involved. Any condition that allows people to pay below the minimum premium may be arranged in the pension contracts. Premiums paid by participants shall be routed to the investment in two days from the receipt by the pension-company in accordance with the fund distribution determined by the participant..

People can change their pension-scheme they are included in accordance with the pension contract they make only at the end of one year from the date of last amendment to the pension-scheme. Notice of an amendment to the pension-scheme shall be sent to the pension-company in writing at least five business days from the date of amendment. If the request of the participant for an amendment is found acceptable, s/he is allowed being pass to a new pension scheme as of the date of amendment.

Participants can transfer their accumulations in their account only at the end of one year from the date of enforcement date of pension contract. All rights that the participant has from the date of participation in the scheme shall be maintained in new pension-company transferred. 

Participants are entitled to retirement when they complete their age of 56, providing that they will stay in the scheme at least ten years from the date of their original participation in the scheme. The ten-year requirement shall be deemed as satisfied if the participant pays the minimum premiums for ten years, without taking back his/her accumulated premiums, or s/he pays the total amount of premiums equivalent to the total minimum premiums of ten years, providing that the participant must stay in the individual pension scheme for full ten years from the enforcement date of the first pension contract.

It is enough for a participant to be entitled to individual retirement from at least one pension contract for being entitled to individual retirement from all pension contracts. 

Individual retirements are not under the government guaranty. However, they are under the control and supervision of many institutions, including but not limited to Undersecretariat for Treasury, Capital Market Board, Pension Monitoring Centre, Takasbank, Independent Audit Companies. Accumulations of participants are under the custody of Takasbank as funds, and from that participants can withdraw or transfer their accumulations.

Property of the fund cannot be attached, mortgaged or offered as a security against debts.

In the individual retirement scheme, premiums to be paid to the pension funds can be deducted from the rate of income tax, providing that they will not exceed 10% for the self-employed and annual total of the minimum wages rate for employees. Council of Ministers is authorised to increase the limit of 10% to 20% and the annual total of minimum wages rate to its 2 fold.

Premium margins paid by employers to the individual retirement scheme for their employees can be entered as an expense directly, providing that they will not exceed the said limit of 10%.
Further, the earnings of the pension mutual funds obtained from portfolio management are exempted from corporate tax.

25% of the payments made to those people who are entitled to retirement under the individual pension scheme and to those who leave the system necessarily due to death, disability or disqualification shall be exempted from the income tax and any withholding.

Pension salaries or retirement grants which are paid after the entitlement to retirement and of which 25% are exempted from tax of any kind shall be deemed as the revenue of securities and they will be subject to withholdings tax instead of any return.

Accordingly, pension funds, relief funds and pension and insurance companies, which have legal entity, shall be subject to a withholding in rate of:

a) 15% for the payments made to those who have left the individual retirement scheme without paying premium, subscription or contribution fees for ten years.

b) 10% for the payments made to those who have paid the subscriptions for ten years, but left the individual retirement scheme before being entitled to the right of retirement and to those who paid premium or subscription to other schemes or insurance companies for ten years, but left this individual retirement scheme necessarily due to the reasons such as death, disability or disqualification.

c) 5% for the payments made to those who have been entitled to retirement from the individual retirement scheme and those who left the necessarily due to the reasons such as death, disability or disqualification.

All papers issued by insurance and retirement companies and retirement mutual funds shall be exempted from stamp duty.

A certain entrance fee may be charged when a participant enters an individual pension scheme for the first time or s/he opens a new individual pension fund. The entrance fee cannot be above the half of the minimum monthly salary. It can be charged in instalments in a period which may not be longer than one year from the execution of the pension contract.

Further, the followings may be charged:

- a deduction for management fees which may not exceed 8% of the premiums,

- a deduction for fund operation expenses which may not exceed 0.010 of the daily net asset value of the fund,

- in case of an interruption in the payment of participation fee or special services other than the standard services described in the pension contract, a deduction to be made by decreasing the number of funds available in the individual pension account of the participant to the extent that covers the amount of deduction, by a prior notice to the participant, providing that the deduction will not exceed 25% of the minimum monthly salary.

- In order not to reflect any cost arising out of payment of premiums by a participant through credit card or other payment instruments to other participants, a deduction for covering such costs at the amount of rate that will not exceed the market prices of the costs, which will be collected as an addition to the premium