Double pension opportunity for retirees: TES expected to be launched this year

In Turkey, a second pension model had begun to be implemented through the Automatic Enrollment Private Pension System (BES), which has been in effect for some time. This system is now being made even more comprehensive with new regulations.

Thanks to the Complementary Pension System (TES), employees will be able to earn additional income by receiving a salary from both the Social Security Institution (SGK) and TES upon retirement. Furthermore, retirees will be able to withdraw their accumulated funds in TES as a lump sum whenever they wish.

In a report featured in Milliyet, Certified Public Accountant and Economist Muhammet Bayram stated the following:

“The Supplementary Pension System is expected to be implemented within the scope of the Medium-Term Program. In this way, retirees will also be entitled to receive a double salary. The TES will be an alternative pension system, but it will not replace the SSI.”

Previously, a transition to the auto-enrollment Private Pension System (BES) was implemented, but BES is not mandatory. Initial enrollments are made by the employer, and employees can subsequently opt out of the auto-enrollment system at their discretion.

The Supplementary Pension System will become mandatory for new hires and will be applied gradually to current employees until their retirement period.

All employees will be able to benefit from this. BES is a system where premiums are deposited even if you are not working. I believe that for TES, premiums will not be deposited for those who are not working.

The amounts deposited in BES are valued in a specific fund. There is no obligation in BES, but for TES, individuals will be able to qualify for a second pension through mandatory premium payments made by the employer.

Employers will transfer money into employees' accounts every month, just as they pay insurance premiums. I do not think there will be any alternative to the Social Security Institution (SGK). There should be some reduction from the unemployment insurance fund and other funds so that employers' costs do not increase. A secondary pension system should be introduced without placing too much burden on the employer.

In this case, there will not be a situation where money is deposited directly into the employee's personal account; rather, it will be a matter of depositing money into the employee's account within the TES (Supplementary Pension System).

Regarding the age requirement, insurance premiums can be counted starting from the age of 18 under the Social Security Institution (SGK). An age requirement of 18 could also be introduced for the Retirement in Employment System (TES); however, premiums paid on behalf of those who started working earlier must also be counted. There should be no age requirement.

In the Private Pension System (BES), employees can choose to receive their money as a lump sum or as a monthly payment upon retirement. It will be exactly the same in the Complementary Pension System (TES).

I believe that TES will serve as a second pension system and that, even if premiums are paid at a low level, it will offer retirees an average salary amount. I believe it will make a significant contribution to the welfare of retirees.”