New bill paving way for mandatory private pension for workers

The Turkish government has been preparing a new legislation that will make joining Individual Retirement System (BES) compulsory for three years for Turkish employees, in accordance with the new economic plan presented last Thursday by the Minister of Treasury and Finance, Berat Albayrak, Birgün newspaper reported on Tuesday.

BES, according to the existing system,  is a voluntary private pension system every Turkish wage earner under 45 years of age are automatically enrolled, but allowed to get out within two months, after they are informed about being included in the plan.

The existing system was introduced in 2016 and almost 60 percent of employees have opted out of system since then, receiving their contributions.

The new system expected to be introduced in the coming days will allow workers to withdraw from BES three years later during which time they will continue contributing to private insurance firms.

The head of the Union of Office Workers, Serpil Akpınar, told Birgün newspaper that the changes aim to make the workers pay the price of the recent economic crisis in Turkey and will actually mean the destruction of public pension system.

The Turkish lira has dropped by 40 percent against the dollar this year, which forced the Turkish central bank to announce interest rate hikes in early September.

Albayrak last week announced a new economic plan, which promises significant budget cuts and improvement of fiscal discipline.

“The individual retirement system, to which the employees are automatically enrolled by their employers, will be restructured and will be made more sustainable,” Albayrak said.