Pension Funds: The Road to a Pleasant Retirement
The system’s primary purpose is to provide the contributors with the opportunity to put their money to good use.
Even though it recently has become a trending topic among the people of Turkey, the individual retirement system, hence pension funds, have been present in the Turkish market for over more than a decade. The pension fund system works strictly on a voluntary basis where the contributors choose to have an additional back- up plan for their retirement years alongside the state pension system.
The legal framework which regulates pension schemes offered by private pension companies was first introduced in 2001, but the system was not put into effect until 2003. In 2013, the Capital Markets Board (the “CMB”) introduced new legislation regulating the incorporation and activities of pension funds through a private retirement system.
The system’s primary purpose is to provide the contributors with the opportunity to put their money to good use by providing an alternative method to save money for retirement. In that respect, the contributor will no longer have to resort to “under mattress” savings, but instead can increase the valueO his or her savings by contributing to a private pension scheme.
Following the enactment of the private pension legislation, there are currently two main pension systems in Turkey: (i) the state pension system; and (ii) private pension systems.