Auto-enrollment increases savings incrementally

 
 

Businesses with 10 to 49 employees will be joining Individual Pension System via Auto-Enrollment as of July 2018. According to the statistics announced by Pension Monitoring Center as of 6 June 2018, auto-enrollment will bring 4.5 million employees from 231 thousand businesses into the BES system. BES accumulated 7 million participants between 2003 and 2017; and reached 11 million participants thanks to the auto-enrollment system, which has been effective for one and half years.

 

“Number of all participants in workplaces that will join the system will be taken into account. However, we will continue including employees who are younger than 45 years old,” said Insurance Association of Turkey in a statement. Employees that have joined the auto-enrollment system have so far saved 2.9 billion TL for their futures. According to the statistics by Pension Monitoring Center, 75 thousand workplaces have joined the system since the initiation of Auto-Enrollment. 4 million employees in auto-enrollment have saved 2.9 billion TL in funds. Insurance Association of Turkey underlines that Auto-Enrollment System has a great significance in terms of contribution to total savings and adds: “Today, at the third step of auto-enrollment, Individual Pension System (BES) has 11 million participants in total. With the new phase that will begin as of July, 4.5 million more employees will start saving thanks to this application.” 

 

Workplaces / employers should first choose a pension company to work with

 

Workplaces falling under the scope of auto-enrollment should first talk to a pension company and sign pension contracts on behalf of their employees. They can notify pension companies about fund selections according to the preferences of their employees or select the funds themselves on behalf of employees who have not selected any funds. Employers are responsible from deducing the contribution amounts from employee salaries and transferring them to pension companies. Insurance Association of Turkey reminded in a statement that workplaces joining the system according to the schedule should comply with their legal obligations, or would otherwise be subject to penalties. All workplaces and employers that will join the system are required to contract with a pension company and inform its employees about the new phase. Auto enrollment offers interest-bearing and interest-free funds to employees at the same time and under the same terms and conditions. 63 percent (1.8 billion TL) of 2.9 billion TL accumulated in the system so far comes from interest-free funds and the remaining 37 percent (1.1 billion TL) comes from interest-bearing funds. 

 

25 percent additional contribution made by the state

 

Auto-enrollment provides 25 percent additional contribution as state-subsidy for each contribution payment, and deposits 1.000 TL to the pension accounts of employees who decide to stay in the system, for once at the end of first two months. Furthermore, if the participants who are entitled for retirement wish to receive their accumulations as pensions, the system rewards loyal participants, making 5 percent additional contribution for employees who prefer at least 10 years of annuity payments.

 

 

 
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