TAX NEWS NO: 2017/2
January 6, 2017
The regulation on the liabilities of employers regarding auto-enrollment to pension plans was promulgated in the no 29900 Official Gazette on 26th October 2016.
The Ministry Regulation for liabilities of employees regarding auto-enrollment to pension plans was promulgated in the no 29900 Official Gazette on 26 October 2016.
With the Ministry Regulation numbered 2016/26, liabilities of employers regarding auto-enrollment to pension plan are referred.
The following points are stated as primary obligations for employers in this frame.
The employers are responsible for the initial selection of the pension provider or more than one provider that are authorized by Under secretariat of Treasury for operating pension plans.
The employers have to assign responsible executives as a representative to sign the private pension contract on behalf of the employees
The employers are obligated to submit pension plans and transfer the contribution margins to the private pension company
In other respects, in the same circular, ıt is stated that employers are liable for any monetary losses which arise due to failing to duly transfer an employee’s contribution payments to the pension company, or from delayed transfers.
Key points of the new system are as below:
1- Employees in the new system
All Turkish resident employees (including blue card owner foreigner employees) under age of 45 regardless of being employed by public or private companies.
2- When the new system will be compulsory?
Private Companies with more than 1.000 employees: Starting 1.1.2017
All Public Companies & Private Companies with number of employee between 250-999: Starting 1.4.2017
Private Companies with number of employee between 100-249: Starting 1.7.2017
Private Companies with number of employee between 50-99: Starting 1.1.2018
Private Companies with number of employee between 10-49: Starting 1.7.2018
Private Companies with number of employee between 5-9: Starting 1.1.2019
3- What is the compulsory contribution to be paid by employer by cutting employees net salary:
The amount is minimum 3% of the social security premium base. There will be also state contribution automatically added to this amount which is 25% of the employee’s contribution.
4- Is it possible to exit from compulsory pension system?
The employee(s) have right to exit the system within 2 months of entry date. In this option paid contributions are returned to the employee(s) within 10 days.
5- What is the cost and responsibility of the employer?
There is no cost of the employer due to this system. The employer will be responsible to calculate and transfer the amount to the insurance company. Due to delayed transfer the employer shall compensate loss of the employee. Besides Ministry of Labor and Social Security shall charge compliance penalty.
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