25% Government Subsidy, which took effect last year as an incentive for the individual pension fund system, added new momentum to this scheme. As the number of participants increased by 1 million, the age and occupation groups that were previously skeptical started to show interest. 2013 was significant in terms of the ten years of individual pension plan that was put into effect on 27th October 2003 as part of social security reform and some legal arrangements in the form of reforms have been made effective. The 25% government subsidy incentive, which was put into practice as of 1st January 2013, marks a turning point for the individual pension funds as their growth gained momentum. Thanks to this incentive, the number of the new participants in the scheme doubled in the year 2013 in comparison to the previous year and reached the level of 1 million net. Government Subsidy incentive, induced many different groups to participate in the system while having a certain appeal for the existing participants. In 2013, one of each of five contracts executed belonged to the existing pension fund participants. 25 % government subsidy also acted as an incentive for the ones who were once a part of the system but left willingly. The ones who rejoined the scheme from among this group reached 7.4 % in comparison to 5.5 %, the average for all years involved. It has been observed that the number of new participants from the 25-34 age group in the year 2013 was 375,000. The second highest number of new participants was from the 35-44 age group, close to 300,000. GOVERNMENT SUBSIDY WAS ALSO AN INCENTIVE FOR THE ‘MIDDLE AGE’ GROUP While the average age of the participants when they first become a part of the scheme was 34 until 2013, it has been observed that this has increased to 36.5 in the aftermath of the introduction of the incentive, especially amongst females, pointing to the fact that the incentive led participants above a certain age to take action. 2013 was also the year the remnants of the economic crisis that has affected the entire world were eradicated, to a certain degree. While annual average contributions of participants in the scheme regressed to their lowest level of TRY 2,200 in 2008, adjusted to the present, this number settled at the level of TRY 2,500 in 2013. The subsidy provided by the government in 2013 also led to an increase in the average contributions made by the new participants in the scheme. As the participation shares increased close to 30 %, the size of the fund exceeded TRY 25 billion. As of the end of 2013, participation shares totaled TRY 21.9 billion. TRY 21.4 billion remaining after the deduction of the management fees of TRY 466 million was directed to investments. THE SCHEME’S FIRST PENSIONERS WERE IN 2013 2013 was also significant in terms of the fact that it was the year that saw the first pensioners of the scheme. A total of 7500 of approximately 14,500 participants that took part in the scheme ten years ago and had become 56 years of age received their accumulations. Approximately 7,000 participants on the other hand decided to continue to save under the scheme in spite of the fact that they were entitled to their pension funds. The first pensioners consisted of those that transferred funds from permanent life insurance schemes, funds, public vocational institutions or other commercial companies of legal entity status. A total of TRY 300.6 million that was transferred to the individual pension fund system from the foregoing entities yielded 22 % return and reached TRY 365.6 million after withholding tax, in the time it was invested in the individual pension fund system. The payments made to individual pensioners revealed that the average savings in the system was TRY 66,150 while 75 % of the pensioners received pension payments of TRY 18,750 or more. THE SIZE OF THE FUND IS CLOSE TO TRY 30 BILLION The increase in the number of participants continued in the first half of 2014. As of 27th June 2014, the number of participants in the scheme was approximately 4,632,000, while the sum of the participations reached TRY 24.4 billion and the total amount in the fund was TRY 29.5 billion. When we look at the distribution of the participants on the basis of the cities as of 27 June, we see that Istanbul ranks first with 29.9 %, followed by Ankara in the second place with 9.3 %, Izmir in third with 7.5 %. These cities were followed by Antalya, Bursa, Adana, Kocaeli, Muğla İçel and Konya respectively. WHAT IS INDIVIDUAL PENSION FUND SYSTEM? The purpose of the individual pension fund system is to direct the savings accumulated by people all through the duration of their employment to investments and as such to ensure that the level of welfare they enjoy during the time they are employed is sustained during their retirement. WHO CAN PARTICIPATE IN THE INDIVIDUAL PENSION FUND SYSTEM? People who possesses juridical capacity can participate in the scheme. To be able to participate in the system it is sufficient to sign a pension contract with one of the pension companies. HOW DOES THE SYSTEM OPERATE? The contributions that are collected by the pension companies are invested in the pension investment funds. The participant decides on the fund or funds in which his/her savings will be invested on the basis of his/her risk and return expectations. The funds are managed by specialized fund managers. WHEN WILL I BE ENTITLED TO MY PENSION? The participant will be required to stay invested in the scheme for a period of 10 years starting from the date of his/her first introduction to the system and upon turning 56 will be pensioned off in the individual pension fund system. If the participant desires, he/she can exercise his pension entitlement at a later date. CAN I LEAVE THE SYSTEM PRIOR TO BEING ENTITLED TO MY PENSION? The participant can leave the system any time he desires. However, under the circumstances he will not be able to benefit from the advantages. When he leaves the fund prior to completing the 10-year limit, a withholding tax at the rate of 15 % will be deducted, while the withholding tax applicable to the savings of the participants that complete 10 years in the system but who have not yet turned 56 years of age will be 10%.