Frequently Asked Questions - Pension Funds

Can everybody participate in the system and what are the participation requirements?

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

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What are the investment alternatives of a participant?

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 income 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 the funds?

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.

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What are the requirements to be entitled to retirement?

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 

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Is the Private Pension System under the government guaranty?

The System is 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.

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