11 May 2021
Mandatory Individual Retirement Contribution for the Employees of Non-Governmental Organizations
The Regulation on Automatic Inclusion of Employees in the Retirement Plan through their Employers, which entered into force on 27 December 27 2018, requires workplaces with 5 or more employees to register their employees in the Individual Retirement System (“IRS”). Non-governmental organizations are also subject to these obligations.
What does this mean?
Employers are required to include their employees in the IRS, deduct their mandatory contribution from their salary and pay these contribution directly to the company holding the IRS funds.
Which Workplaces are in the Scope?
Workplaces with 5 or more employees, are obliged to register their employees in the IRS as of January 1, 2019.
While calculating the number of employees in the workplace,
- for the employers continuing their activities; the number of the 4-A insured employees in the last monthly premium service document notified to the Social Security Institution,
- for newly registered workplaces; the "number of insured persons to be employed" declared in the workplace declaration,
will be taken into account.
Which Employees are in the Scope?
Only the employees who are under the age of 45 and citizens of the Republic of Turkey are in the scope of the regulation.
Employees who are included in the individual retirement plan can leave the plan by applying within 2 months. Employees who leave the system by using the right to withdraw will be re-included in the system within 3 years from the date of withdrawal only once.
What is the Sanction?
Within the scope of the temporary article 2 of the Individual Retirements Savings and Investment System Law No.4632, an administrative fine of TRY 163 (for the year 2021) shall be imposed on employers who do not include their employees in the individual retirement plan, for each month and each employee whose contributions are not paid.
What Should I Do?
Determine whether you are under the obligation by calculating the number of employees. Contact a company that offers individual retirement plan services and sign a contract. Include your employees, who are younger than 45 years old and are citizens of the Republic of Turkey within the plan. Inform the employees that they are included in the IRS and that they can leave the plan within 2 months if they wish.