Pathway: LEGISLATION Tax Legislation Changes in Private Pension Law

Changes in Private Pension Law

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“The Law on Making Amendments on Private Pension Savings and Investment System Law number
6327 and some other Laws and Decree Laws” has been entered into force on 28 June 2012 upon
being published on the Official Journal number 28338. Some of the significant changes introduced
through this law are summarized as follows.
Article 4
Contributions paid by employers to the private pension system on behalf of the employees could be
subject to deduction from income tax provided that it shall not exceed more than 15% of the monthly
wages and annual minimum wages amount for which the contribution was made. Council of Ministers
is authorized to reduce such rate to half or double it or increase it provided that it does not exceed the
limit prescribed or more than two times the minimum wage.
This article of the law shall be applicable as of 01 January 2013.
Article 5
50% of the life insurance policies of employees, their wife and little children as well as the premiums
paid for such insurance policies as death, accident, health, illness, injury, unemployment, maternity,
childbirth and collection could be subject to deduction provided that it shall not exceed more than 15%
of the monthly wages and annual minimum wages amount for which the payment was made. Council
of Ministers is authorized to reduce such rate to half or double it or increase it provided that it does not
exceed the limit prescribed or more than two times the minimum wage.
This article of the law shall be applicable as of 01 January 2013.
The total amount of premium payments to be subject to deduction shall be taken into account when
the calculation is made in order to avoid exceeding more than 15% of the monthly wages and annual
minimum wage amount. Moreover, it is imperative that premium amounts have been paid in the year
when the income was gained and they have not been subject to deduction previously. If spouses and/
or children submit separate declarations then the premiums pertaining to the same shall be deducted
from their own incomes.
Article 29
Except for the ones paid by the employers, the amount that corresponds to the 25% of the
contributions paid to the private pension account on behalf of the contributor shall be deemed
as “State Contribution” and thus shall be covered by the Undersecretariat of Treasury. State
contribution shall be evaluated as separate from that of other contributions and channeled through
investments by the investment tools designated by the Undersecretariat.
State contribution, the total amount of contributions taken into account in calculation of State
contribution as well as those paid for a contributor during a calendar year can not exceed the total
gross minimum wages amount applicable at the end of relevant calendar year. Of the contributors,
those remaining in the system for at least 3 years shall be entitled to the state contribution and 15% of
their incomes, if any, and those remaining in the system for at least 6 years shall be entitled to 35% of
their incomes, and those remaining in the system for at least 10 years shall be entitled to 60% of their
incomes. Those that are entitled to pension right from private pension system and those who left the
scheme due to death or invalidity shall be entitled to the state contribution and all of their income, if
any.
This article of the law shall be applicable as of 01 January 2013.
With the implementation of the state contribution it shall be no longer applicable to keep the
contributions paid to the private pension system by individuals free from tax.
No State Contribution shall be paid until 31 December 2014 for the contributions paid to the private
pension system by those who have been within private pension system since 29 May 2012 and
terminated their pension contract within 2 years following the enforcement date of the law by taking
their contributions.
Provided that they remain within the system for 3 years following 01 January 2013, the contributors
who entered into the system prior to 01 January 2013, and thus remain in the system for more than
3 years and less than 6 years, shall be given, for once, an extra 1 year in addition to the total amount
of time they have remained in the system, and those who remain in the system for more than 6 years
and less than 10 years shall be given additional 2 years, and those who remain more than 10 years
shall be given additional 3 years.
Click on the link for the full Turkish text of The Law on Making Amendments on Private Pension
Savings and Investment System Law number 6327 and some other Laws and Decree Laws. It is
beneficial that it is shared with those concerned locals.

“The Law on Making Amendments on Private Pension Savings and Investment System Law number 6327 and some other Laws and Decree Laws” has been entered into force on 28 June 2012 upon being published on the Official Journal number 28338. Some of the significant changes introduced through this law are summarized as follows.

Article 4

Contributions paid by employers to the private pension system on behalf of the employees could be subject to deduction from income tax provided that it shall not exceed more than 15% of the monthly wages and annual minimum wages amount for which the contribution was made. Council of Ministers is authorized to reduce such rate to half or double it or increase it provided that it does not exceed the limit prescribed or more than two times the minimum wage.

This article of the law shall be applicable as of 01 January 2013.

Article 5

50% of the life insurance policies of employees, their wife and little children as well as the premiums paid for such insurance policies as death, accident, health, illness, injury, unemployment, maternity, childbirth and collection could be subject to deduction provided that it shall not exceed more than 15% of the monthly wages and annual minimum wages amount for which the payment was made. Council of Ministers is authorized to reduce such rate to half or double it or increase it provided that it does not exceed the limit prescribed or more than two times the minimum wage.

This article of the law shall be applicable as of 01 January 2013.

The total amount of premium payments to be subject to deduction shall be taken into account when the calculation is made in order to avoid exceeding more than 15% of the monthly wages and annual minimum wage amount. Moreover, it is imperative that premium amounts have been paid in the year when the income was gained and they have not been subject to deduction previously. If spouses and/or children submit separate declarations then the premiums pertaining to the same shall be deducted from their own incomes.

Article 29

Except for the ones paid by the employers, the amount that corresponds to the 25% of the contributions paid to the private pension account on behalf of the contributor shall be deemed as “State Contribution” and thus shall be covered by the Undersecretariat of Treasury. State contribution shall be evaluated as separate from that of other contributions and channeled through investments by the investment tools designated by the Undersecretariat.
State contribution, the total amount of contributions taken into account in calculation of State contribution as well as those paid for a contributor during a calendar year can not exceed the total gross minimum wages amount applicable at the end of relevant calendar year. Of the contributors, those remaining in the system for at least 3 years shall be entitled to the state contribution and 15% of their incomes, if any, and those remaining in the system for at least 6 years shall be entitled to 35% of their incomes, and those remaining in the system for at least 10 years shall be entitled to 60% of their incomes. Those that are entitled to pension right from private pension system and those who left the scheme due to death or invalidity shall be entitled to the state contribution and all of their income, if any.

This article of the law shall be applicable as of 01 January 2013.

With the implementation of the state contribution it shall be no longer applicable to keep the contributions paid to the private pension system by individuals free from tax.

No State Contribution shall be paid until 31 December 2014 for the contributions paid to the private pension system by those who have been within private pension system since 29 May 2012 and terminated their pension contract within 2 years following the enforcement date of the law by taking their contributions.

Provided that they remain within the system for 3 years following 01 January 2013, the contributors who entered into the system prior to 01 January 2013, and thus remain in the system for more than 3 years and less than 6 years, shall be given, for once, an extra 1 year in addition to the total amount of time they have remained in the system, and those who remain in the system for more than 6 years
and less than 10 years shall be given additional 2 years, and those who remain more than 10 years shall be given additional 3 years.

Click on the link for the full Turkish text of The Law on Making Amendments on Private Pension Savings and Investment System Law number 6327 and some other Laws and Decree Laws. It is beneficial that it is shared with those concerned locals.

 http://www.resmigazete.gov.tr/eskiler/2012/06/20120629-1.htm