Participant Information Guide

Anyone with a with the capacity to act may participate in the IPS, regardless of employment, taxpayer, nationality status or age limit.

1. Can Individuals Under 18 Join the Individual Pension System (IPS)?

Yes. Under the amendment on May 25, 2021, to Law No. 4632 on Individual Pension Savings and Investment System, individuals under 18 can join the system through their legal representatives as per custody/guardianship provisions.

2. Is There a Minimum Age Limit For Individuals Under 18 in the IPS?

No, anyone can join the individual pension system, regardless of age.

3. How Can Individuals Under 18 Join the IPS?

Individuals under 18 can join the system with their legal representatives who perform transactions for and on their behalf.

Although there may be exceptions, the legal representatives are usually:

• Both the mother and father if the mother and father are married,
• The parent who has custody if the mother and father are not married,
• A court-appointed guardian if the parents are not alive or have lost custody.

Legal representatives can start a pension scheme for individuals under 18 by meeting face-to-face with a licensed individual pension intermediary through pension companies and authorized distribution channels (banks, agencies, regional offices, call centers, websites, etc.). They can also purchase individual pension contracts through distant sales.

4. What are the Additional Documents Required for Making Contracts for Individuals Under 18?

Legal representatives and/or people who will pay the contributions, if other than the legal representatives, must present ID documents when concluding the contract. The child’s guardian can enter into an individual pension contract on behalf of the child if they present a court decision regarding their appointment by the relevant authority. The guardians should also submit a permission letter obtained from the same authority to conclude a pension contract on behalf of the child under Article 462 of the Turkish Civil Code.

5. Is there a State Contribution for the Contracts of Individuals Under 18?

Yes. State contribution is the 30-percent state-paid part of the contributions, just as in other contracts. State contribution upper limit is 30 percent of the annual gross minimum wage.

6. When Can Individuals Under 18 Retire from the IPS?/strong>

Like other participants, individuals under 18 should stay in the system for ten years from the contract date and reach 56 years old.

7. Can Individuals Under 18 pay contributions themselves?

No. Only legal representatives or contributors who are specified in the contract to make payments for and on behalf of the participants can pay contributions. Contributors should not be banned or later objected to making the payments by legal representatives. The participants may pay contributions themselves after acquiring legal capacity.

8. Who Can Exercise the Rights in Pension Contracts of Individuals Under 18? Can the Exercise of Rights Be Transferred to Contributors Making Payments for and on behalf of the Participants?

The contractual rights of individuals under 18 are exercised by parents or guardians as their legal representatives. Except for the right to leave the system and to retire, the exercise of contractual rights may be transferred to contributors who make payments for and on behalf of the participants as long as contributors should not be banned or later objected to by legal representatives.

The participants are responsible for exercising their contractual rights after acquiring the capacity to act. After earning the legal capacity, the participants may transfer their contractual rights to contributors who make payments for and on behalf of them, except for the right to leave the system and to retire.

9. Is There a Separate Regulation for Individuals Under 18 on Leaving the System?

Individuals under 18 can leave the system at any time upon application through their legal representatives as per the legislation. The participants may leave the system themselves after acquiring legal capacity.

Upon leaving, the corresponding amount is transferred into an account belonging to the participant.

10. Can Pension Contracts of Individuals Under 18 Be Seized Due to Debts of their Legal Representatives or Contributors Who Make Payments for and on behalf of Participants?

No, pension savings of participants under 18 cannot be seized due to the debts of their legal representatives or contributors who make payments for and on behalf of the participants.

You can find out about the IPS through pension companies or distribution channels such as a bank, agency, regional district, call center, website, or any place authorized by pension companies.

You may participate in the system by purchasing your contract by meeting a licensed individual pension intermediary in person or through the distant sales method.

When choosing your pension company:

1. A. Make sure to find out about their deductions.

Your pension company may make the following deductions as part of the pension contract drawn up with you:

• A one-time entrance fee deduction at the time of contract signing or at a later date as a deferred payment,
• A management fee deduction based on your contribution payments or accumulations in the system,
• An additional management fee deduction on your accumulations in the event of non-payment of your contribution within three months following the contract payment date (as you will be considered to have suspended payments),
• A contribution holiday deduction in case the payment suspension period goes over one year,
• A total fund expense fee, including the fund management fee, to pay for fund expenses

Many of these fees vary depending on the pension company.

1. B. You must pay attention to the past income performance of pension mutual funds

Contributions paid to the IPS by pension companies are invested in the pension mutual funds of the participants' choice. These funds contain investment instruments such as equities, government bonds, precious metals, etc. based on the fund type. Participants' income depends on the earnings or losses in the investment instruments of the preferred funds. It is always in the hands of the participants to determine the risks to take. The participants can choose either low-risk funds for a more secure investment or high-risk funds for higher-earning projections. You are recommended to examine short-, medium- and long-term past performances of your fund choices. Consider any additional benefits you may be offered.

1. C. Pay should be based on the service variety and quality offered by the pension companies.

Your pension company is responsible for giving you access to your up-to-date individual pension account information and for offering you contractual services through the call center and the corporate website. Also, it is vital for your pension company to give you sound direction when choosing the right pension mutual fund. It is also crucial to have instant access to your pension company when you need it.

Make sure that your pension company meets your expectations on service variety and quality through your chosen communication channel.

1. D. Be careful about the blocking period.

Pension companies sign a service contract with banks regarding the payment of contributions. In accordance with the contract, by the end of the blocking period, banks transfer the money collected from participants to the pension company. The blocking period may vary from company to company.

Find out about the period between the date when your contribution payment is paid by your credit card or from your bank account and the date transferred into your individual pension account. The shorter this period, the sooner your contribution is invested and the sooner your state contribution is paid into your account.

A pension contract sets forth the procedures and principles and the parties' relevant rights and liabilities concerning:

• the opening of an individual pension account at your pension company,
• paying contributions,
• investing your contribution payments into your choice of funds,
• paying the accumulations in your account to the beneficiaries

Three types of pension contracts can be drawn up:

• You can enter into an “individual pension contract” with your pension company. In this case, you and the pension company become the parties to the contract.
• You enter into a “group pension contract” with a pension company as a member of a group. In this case, your contract is associated with a group pension plan and, once again, you and the pension company become the parties to the contract.
• Your employer enters into a “noncontributory group contract” with a pension company for a group of its employees, including you. In this case, your employer pays contributions on your behalf and it may deduct this amount from the tax base by writing it off as an expense. Your employer and the pension company become the parties to the employer group pension contract.

Once your pension company is identified, the company will recommend you a pension plan.

A pension plan basically involves the following:

• the funds offered to you by the pension company,
• the contributions you will pay,
• entrance fee,
• management fee deduction and fund expense fee total deduction,
• additional management fee deductions made in the event of a contribution holiday,

and related calculations and other technical rules on pension contract implementation.

When deciding on your pension plan, it pays to take into consideration the deductions in the plan and past performance of the pension mutual funds offered in the plan.

You may also inquire if the funds offered in the plan are in line with your overall investment strategy and risk behavior and if the pension company offers additional services in the plan on top of the standard services.

Entrance Fee

Your pension company may withdraw management fee from your contributions or from your accumulation within the first 5 years of your contract.

Management Fee Deductions

In the event of failing to make a payment into your account within three months of the due date of your contribution payment, it will be assumed that you have suspended your payments.

Deductions for Contribution Holiday

• If you suspend contribution payments, an additional management fee deduction may apply to your accumulation for the suspension period.
• In the event of suspending contribution payments for one year, in addition to the aforementioned “additional management fee deduction,” the fixed costs paid to the Pension Monitoring Center with regard to your individual pension account may also be deducted from your accumulation.

Upper Limits for the Entrance Fee, Management Fee Deduction, and Deductions for a Contribution Holiday

In the first five years of your contract, the total of your entrance fee, management fee deduction, and deduction for a contribution holiday cannot exceed 8.5 percent of the monthly gross minimum wage in effect during the first half of each relevant calendar year. No such deductions shall be made for the sixth year and beyond of your contract.

In the event of terminating your contract before five years, except due to retirement or involuntary reasons, the company may apply a deferred entry fee deduction to your individual pension account accumulation in an amount that corresponds to the five-year period of your contract that has not been collected by the company by your withdrawal date.

Your pension company is responsible for ensuring that the deductions made each year in the first five years of your contract do not go over the aforementioned deduction upper limits. In the event that the upper limit has been exceeded, the excess amount shall be refunded to you within five working days.

Fund Expense Fee Total

Fund portfolio value: Calculated in consequence of appraisal of the assets in the fund portfolio pursuant to the provisions of Regulation on Amendment of the Regulation on the Establishment and Operation Principles of Pension Mutual Funds.

Total fund value: Calculated by adding other assets and receivables, if any, to the fund value and then subtracting the payables.

Net fund asset value: Total value calculated by adding cash and fund receivables to the portfolio value and then subtracting the payables.

Unit fund value: Calculated by dividing the net asset value by the number of shares in circulation.

Your pension company may apply the following based on the fund portfolio value:

• Fund management fee deduction,
• Other deductions,
  
  • Registration and publication fees,
  • Custody service fees,
  • Independent audit fees,
  • Public Disclosure Platform fees,
  • Portfolio management fees,
  • Intermediary commissions related to fund portfolio transactions,
  • Index license fees.

The fund management fee deduction is the fee paid to the pension company for fund management purposes.

Pension companies are free to set the fund management fees provided that they do not exceed the fund expense fee total. Please click to review in detail how the deduction is calculated.

The fund expense fee total is obtained from the fund assets, and as such it causes the fund income to decrease. This deduction is made daily from the fund portfolio value, not from the participant's accumulation. Total fund management fee deductions made throughout the year may exceed the fund expense fee total that can be made within the year.

The fund expense fee total is obtained from the fund assets, and as such it causes the fund income to decrease. This deduction is made daily from the fund portfolio value, not from the participant's accumulation. Total fund management fee deductions made throughout the year may exceed the fund expense fee total that can be made within the year.

For instance, if a 10-percent annual value increase occurs in the assets on which a fund with an annual fee deduction of 2.28 percent is invested, this fund’s annual return would be about 7.72 percent due to the deductions. Similarly, if a 10-percent annual value increase occurs in the assets on which a fund with an annual fee deduction of 1 percent is invested, this fund’s annual return would be about 9 percent due to the deductions.

The following table shows the maximum fund expense fee totals allowed.

The participant must assess the pension mutual fund plans according to personal preferences, fund performance and the fund management fee deduction rates.

Explanations on the table:

* The CMB shall be authorized to change the fund grouping with approval of the Ministry of Treasury and Finance.

* The funds’ regular public disclosure form on the PDP must show the distribution rate of the fund management fee between the founder and the portfolio manager.

* The founder checks daily if the daily deduction rate stated in the fund bylaw is exceeded and enters it in the accounting records. If the founder determines that the accumulative calculation of the daily rates stated in the fund bylaw are exceed in comparison to the daily average fund net asset value, it shall refund the excess amount within five working days following the relevant calendar year.

* According to the wording in the fund title, if more than one rate applies in the annual total fee rates in attachment 2 of the Individual Pension System Regulation, the lower rate shall apply
For example: The title of the Gold Participation Pension Mutual Fund bears the words “Gold” and “Participation.” Attachment 2 of the Individual Pension System Regulation states the annual total fee rate as 1.09 percent for the Gold Fund and as 2.28 percent for the Participation Fund (grouped in Equity/Other Funds). Accordingly, a 1.09-percent rate must be used for this fund.

Refund of the Fund Expense Fee Total

To be valid by January 1, 2021, the rates in the following table shall apply for the refund of the deduction made in the relevant year at the contract’s sixth year-end and at each following year-end. In the event of contract termination, the refund shall be made to you by the end of the fifth following working day. The contract duration shall be calculated based on the time spent in the system after January 1, 2013. Refund calculation shall not include the performance deduction by the pension mutual funds and the deductions made to pay for the necessary fund expenses.

No refund will be applied to any portion less than 1.1% of accumulation existing as of the date of deduction calculation; any deduction that reduces the deduction balance remaining after a refund below 1.1% of the accumulation will not be subject to any refund.

Please click here for detailed information about refunding the Fund Expense Fee Total.

Contribution

Pension companies are entitled to set a minimum amount of contribution in their pension plans. The contribution amount you will pay this way must be at least equal to the lower limit stated in your plan.

Irregular Payment

If you fail to pay your contribution within 3 months following the due date, your contract shall be considered in the irregular payment status.

In order to take your pension contract out of the irregular payment status, you may have to pay the full amount of your unpaid contractual contribution dues in one lump-sum. Pension companies may waive the contractual requirement to pay all unpaid contribution dues in one lump-sum by providing favorable benefits in their pension plans.

Beginning January 1, 2021, pension contracts with an irregular payment status will not be included in the total deduction amount refund practice.

Special Services Provided by Pension Companies / Additional Benefits

Your pension company may provide you with:

• additional benefits such as deduction reimbursements or contribution payments that can affect your accumulations
• or additional services and benefits such as points/bonuses paid into credit cards, free personal accident insurance, emergency health services, roadside assistance, locksmith service, and so on

Find out the coverage and expiration dates of such services and benefits provided as part of your retirement plan from your pension company.

Deduction Controls and Refunds Applicable Beginning January 1, 2021

If you terminate your pension contract in the 6th year or after, the total deduction that can be made within the scope of your contract cannot exceed the following ratio of the balance of the state contribution account associated with your contract upon the expiry date. This check will be implemented on January 1, 2021.

In the event that the upper limit has been exceeded, the excess amount shall be refunded to you within five working days.

Click here for an example.

Situations Where Deduction Refunds Will Not Be Considered Beginning January 1, 2021

The deduction upper limit associated with the state contribution to be applied beginning January 1, 2021 will not be checked

• in the case of pension contracts that are in irregular payment status as of the date of checking
• with total amount of accumulations

exceeding 10 times the annual gross minimum wage.

In calculating the amount of accumulations, the monthly gross minimum wage amount applicable in the first 6 months of the relevant calendar year shall be used.

Concluding the Pension Contract

• Contract concluded face-to-face

The agent contacting you about IPS products will brief you on the operation of the system and the rights and obligations of the parties. He or she will offer you the pension plan that meets your retirement expectations, income level and age.

The fund distribution will be determined based on your preferences. If you do not state any preferences, your accumulation will be invested in the standard funds determined by the pension company.

By accepting the proposed pension plan and signing the contract completing the “Entrance Information Form,” and the “Pension Contract Proposal Form,” you will have concluded the contract. You will be provided with a copy of each such document.

• Pension contract concluded via Internet and Call Center

You are entitled to purchase the IPS product that is right for you through the website or call center of the pension company.

The pension company will brief you on the operation of the system and the rights and obligations of the parties and offer you the pension plan proposal that meets your retirement expectations.

During the proposal phase, you will be informed about the standard fund and other funds and action will be taken depending on your preference. If you do not state any preferences, your accumulations will be directed to investments in the standard fund. You will have concluded the contract by confirming that the proposal includes the necessary information about the pension contract, the pension plan and the system, through secure electronic communication means (text message, electronic mail, internet, fax, and so on).

Immediately after the approval process, the “Entrance Information Form" and the "Pension Contract Proposal Form" will be sent to you either in printed form or on a permanent data store (text message, electronic mail, internet, CD, DVD, memory card and similar media or media) in line with your preferences. You will also be allowed to access these forms through a secure address on the Internet website.

• Validity of your contract

If your pension contract is not rejected by your pension company, then it will take effect on the date the first payment made as a contribution is credited to the accounts of the company after the blocking period, if any.

Your pension company is required to send you your pension contract within 10 working days of the effective date either in printed form or on a permanent data store (text message, electronic mail, internet, CD, DVD, memory card and similar media or media).

As a rule, in individual pension contracts and group pension contracts, contractual benefits are used by the participant. Except for the right to leave the system and the right to retire, the employer or other persons who pay contributions on behalf of the participant may be allowed to use the benefits under these contracts.

Provisions of Turkish Code of Obligations No. 6098 dated January 11, 2011 and Turkish Civil Code No. 4721 dated November 22, 2001 apply to the use of benefits in pension contracts where minors and restricted persons are a party.

• You are entitled to rescind the pension product you bought (you are entitled to use your right of withdrawal during the grace period).

You are entitled to use your right of opt out during the grace period within two months of signing the pension contract proposal form or approving the proposal for distant sale.

Opt out before validity:Upon receipt of your withdrawal notice by your pension company, your previously given contribution instructions will be canceled.

Opt out after validity: The withdrawal instructions given on the working day following the receipt of your withdrawal notice by your pension company will be canceled and the accumulations in your Individual Pension Account will be refunded except for the fund total expense fees within 10 working days of the receipt of your notice by your pension company. If you withdraw after your contract enters into force, a withholding (tax) will be deducted from any income earned.

• You are entitled to determine the type of funds into which your contributions will be invested.

Twelve times a year you are entitled to make changes to the allocation ratios of the funds where your accumulations and the contributions you have paid are invested.

You can buy and sell funds from other pension companies through the Pension Fund Trading Platform (BEFAS).

Through the BEFAS Information Platform established by our institution, you can learn about various funds and evaluate and compare your options.

You can sign in to the secure page created on your pension company’s website and/or mobile application to submit your fund re-allocation request and view and select from several BEFAS funds.

You can access detailed information on BEFAS here.

Please note that you must report your fund allocation change request to your pension company at least 2 working days in advance of the change date!

Please click here for more information about pension funds.

• You are entitled to change your retirement plan.

You may change your retirement plan up to four times a year. You may forward your change request in writing to your pension company or through the pension company call center or on the company’s website. If your pension company approves your request, you will switch over to the new pension plan within 10 working days of notifying the company about your plan change request. Your new pension contract will be sent to you within 10 working days, either in printed form or on a permanent data store (text message, CD, DVD, memory card and all kinds of vehicles or media).

• You may change your contribution amount and suspend your payments.

You may change your contribution amount and payment period during the pension contract under the plan you subscribed.

However, pension companies are also entitled to set a minimum amount of contribution to their pension plans. The contribution amount you will pay this way must be at least equal to the lower limit stated in your plan.

In addition to your regular contribution payments, you may also pay any additional contributions you wish to make at any time.

Keep in mind that in many plans, lower management fees are applied for additional contributions and that no management fees are applied in some plans.

You may also suspend making contribution payments and restart them at any time. In the event of failing to make any payments to your account within 3 months of the due date of your contribution payment, it will be assumed that you have suspended your payments.

Depending on your plan, your pension company may charge you additional management fees in case of a contribution holiday.

• You are entitled to change your pension company.

In order to change your pension company, you have to stay in the pension company for at least two years from the effective date of your contract. If you have already transferred to your current pension company from another pension company, you may then change your company after staying with your current company for at least one year.

• You may leave the IPS at any time.

You may leave the system at any time within the term of your pension contract, but in this case you will not be able to fully benefit from the retirement tax benefits and the state contributions you would otherwise be earning.

When you leave the IPS, you will be paid:

• 15 percent, in the case of staying in the system for at least 3 years,
• 35thirty five percent, in the case of staying in the system for at least 6 years,
• 60 percent, in the case of staying in the system for at least 10 years,
• 100 percent, in the case of death or disability,

of the balance in your state contribution account.

The withholding (tax) rate calculated over the return will be:

• 5 percent for participants in the system who are eligible for retirement and for participants who leave the system due to inevitable reasons such as death, disability or liquidation,
• 10 percent for participants who leave the system before becoming eligible for retirement despite of having stayed in the system for 10 years,
• fifteen percent for participants who leave the system after having stayed for fewer than 10 years.

• You will be protecting your accumulations against sequestration proceedings.

With the exception of alimony payments, no collection by sequestration, encumbrance or bankruptcy proceedings shall be granted on the fund shares invested in your individual pension account, on your accumulations up to the amount calculated by multiplying the number of months you have stayed in the system and the gross minimum wage applicable at the time of collection by sequestration, encumbrance or bankruptcy proceedings and on the annuity payments you will be receiving in the event of retirement under the individual pension system.

• The amount which cannot be collected by sequestration will be calculated on the total of all balances in your accounts.
• If your account has been opened under an employer group pension contract, then the accumulations will not be included in the calculation until the end of the vesting period.

For example, assuming that a participant who has been in the system for 36 months has accumulated 100,000 Turkish lira and the monthly gross minimum wage on the date of foreclosure is 1,777.50 Turkish lira, then the amount of this participant's accumulations of 63,990 Turkish lira (36 x 1.777,50 Turkish lira) will not be sequestered.

For example, assuming that a pensioner who has retired under the IPS receives 2,000 Turkish lira per month from the annuity insurance and the monthly gross minimum wage is 1.777.50 Turkish lira on the date of foreclosure, then the 1.777.50 Turkish lira portion of the 2,000 Turkish lira paid per month will not be subject to any sequestration.

• Information on your IPS account is secured by the legislation on the protection of personal data.

Your personal information will not be shared with third parties without your consent as per the Law on the Protection of Personal Data published in Official Gazette No. 29677 dated April 7, 2016.

• You may bequest your IPS accumulations as an inheritance.

In the event of your death, your accumulations and state contributions and vested returns will be paid to the beneficiary or beneficiaries you have indicated in the contract, and if no beneficiary is defined, then to your legal heirs, without prejudice to the provisions of Turkish Civil Code No. 4721 dated November 22, 2001.

In the event of your death, your pension company cannot collect deferred entry fees from your accumulations.

• You can save money for the future of your children.

The individual pension account offers the opportunity to build your accumulations over a long period of time. For the future of your children who are not of legal capacity, you may open up an account in your own name and assign your children as the beneficiaries. In such a case, the state contribution calculated on your contribution payments will be reduced from your state contribution limit because your account was opened in your name.

• You can save money for the future of your close relatives.

You may open an IPS account in the name of your close relatives and pay their contributions yourself. Because the state contribution limit is determined on a per-person basis, contributions paid to your relatives’ accounts will not affect your state contribution limit. You may have your parents, siblings, spouse, adult children of legal capacity and other people you value benefit from this opportunity.

If you have high savings (i.e., if you are able to save over the contribution amount you have to pay to take full advantage of the state contribution’s upper limit, which is 60,048.00 Turkish lira for 2022 and you want to make the most out of the state contribution, then you may open separate accounts for yourself and your family members.

For example, if your annual savings amount for 2022 is 160,000 Turkish lira, then you may open a separate account on behalf of your spouse and an adult child of legal capacity. Thus, because the maximum state contribution per person is 18,014.40 Turkish lira, a total state contribution of 48,000 Turkish lira would paid to the IPS accounts of you and your family members. If you have paid the said 160,000 Turkish lira into your own account as an investment in the IPS, then only 18,014.40 Turkish lira would have been deposited to your state contribution account.

* The gross minimum wage in 2022 is TL 5,004.00. The annual contribution amount that has to be paid per person in order to take full advantage of the state contribution’s upper limit is 5,004.00x 12 = TL 60,048.00.
** State contribution vesting conditions apply.

• You can keep up to date on your accumulations.

Information about your accumulations can be obtained at any time via your pension company’s call center, website or the website of Istanbul Settlement and Custody Bank Inc.

At least two years before your entitlement to your pension, your pension company will make a proposal to you allowing you to assess your transition to low-risk funds to ensure that your accumulations are less affected by financial market risks.

Within 10 working days of each accounting period, your pension company will send to your defined e-mail address or fax, and if you have not provided one, then to your postal address, an informational note about the important changes made to the legislation and to your pension plan along with an account statement.

In every quarter of the calendar year, information will be provided either through e- mail or the pension company’s website on general information about investment vehicles, up-to-date developments in financial markets, investment and performance information on the funds offered, and any investment and other financial risks that you may be exposed to.

Pension companies can offer you different payment tools for your contribution payments. Some of these are summarized below.

• Pay via wire / EFT

In order for your contribution payments to be made using your bank account number, you must have a defined account in the relevant bank.

• Payment by credit card

Pension companies sign a service contract with banks regarding the payment of contributions. Banks will transfer the money collected from participants to the pension company at the end of the blocking period indicated in the service contract, in accordance with the said contracts. The blocking period may vary from company to company. In this situation, the contributions you have paid will be deposited at the end of the relevant blocking period.

Amounts equal to 30 percent of the contribution payments you have made since January 22, 2022, will be paid as a state contribution into your state contribution account.

• Contributions paid by employers are not included in the state contribution calculation.
• You do not need to be a taxpayer in order to receive state contributions.
• Turkish citizens and holders of a blue card can benefit from the state contribution.

State Contribution Limit

A state contribution is paid into your account equal to 30 percent of the contributions you have paid into the IPS. However, there is an annual upper limit for this amount. The maximum amount of the state contribution you can receive is 30% of the gross minimum wage for the relevant year. For 2022, this amount is 18,014.40 Turkish lira. The state contribution limit is calculated on a per participant basis.

State Contribution Vesting Ratios

Depending on the time spent in the system, you will be entitled to state contributions into your individual pension state contribution account in the following ratios:

• 15 percent, if you stay in the system for at least 3 years,
• 35 percent, if you stay in the system for at least 6 years,
• 60percent, if you stay in the system for at least 10 years,
• 100 percent in the event of your death or disability

Additional time has been granted to participants who joined the system before January 1, 2013, so that it can be taken into account in calculating their entitlement periods for state contributions.

If the time spent in the system before January 1, 2013

• is more than 3 years but less than 6 years or 6 years, then 1 year,
• is more than 3 years but less than 6 years or 6 years, then 2 years,
• is more than 10 years, then 3 years will be added to

the respective contractual periods.

In order to retire, you must attain the age of 56 and have stayed in the system for 10 years from the date of your first entry into the system.

If you have more than one pension contract: if you are entitled to retirement under one of these contracts and you intend to use your right to retire, then you must consolidate all of your retirement contracts, except in the case of your contracts having been established under the AES.

When you apply for retirement, your pension company will send you the “Retirement Request Form,” and the “Information Form,” and send you an “Account Statement,” for you to complete. The retirement information form contains information about continuation and retirement options, as well as sample financial projections and information on the requirement of consolidation of all contracts to be able to use the right to retire.

If you request to receive the full amount of your accumulations and state contribution, then the pension company will pay you within 10 working days of receiving your request.

If you have contracts with more than one pension company, then the pension process will start after the account consolidation process is completed, except in the case of your contracts having been established under the AES.

Once you earn and use the right to retire,

• you will be entitled to request a lump-sum payment of some of your accumulations from the individual pension and state contribution accounts.
• You may also choose to stay in the IPS and receive your accumulations in part from the pension company according to the reimbursement plan you decide.
• You may earn regular income by purchasing an annuity with some or all of your accumulations.

If you have received all of your accumulations, then you will be considered to have left the IPS.

If your contributions are paid by your employer or company, then you must wait for the length of time specified in your contract to qualify for the amount of accumulation in your account. This period varies from 0 to 7 years. The minimum entitlement rates to be applied depending on the years are as follows:

Minimum Entitlement Percentage by Contract Year (%)

• After completing your entitlement period,
  
  
  • If your employer or sponsor continues to pay your contributions on your behalf, you will automatically be entitled to all contributions paid after your entitlement date, but you will not be able to terminate your contract, receive your accumulations, or transfer your account.
  • If your employer or sponsor does not continue to pay your contributions on your behalf, then you can either leave your accumulations in your current account and continue to invest them in their respective funds, withdraw your accumulations at any time, or transfer to another IPS account you have.
  • If you leave your job, you can get the full amount of your accumulation or transfer them to another IPS account you have.

• If you leave your job before the eligibility period:
  
  
  • you can get only the vested part of your accumulations or transfer it to another IPS account you have.

If they have made any retirement-related commitments to members or employees:

• then any balances in the custodial accounts of such associations, foundations,
• professional legal entities,
• and other commercial companies

as of April 16, 2012 deposited with such institutions as accumulations and retirement-related undertakings may be transferred to the Individual Pension system fully or partially until December 31, 2017. Such a transfer would require a resolution by the governing bodies of the related institution.

Transactions related to such transfers are exempted from any corporate tax, duties, stamp duty, bank and insurance transaction tax applicable on the amount of such transfers.

No entrance fees will be charged for the transfer from a participant who has signed a pension contract.

No state contributions will be paid for the amounts transferred in this way. Still, these amounts will be exempt from income tax.

If you withdraw your accumulations in your IPS account created by transferring your accumulations from foundations, funds or other institutions, within 3 years of the date of the transfer, then you will be subject to a 3.75% income tax withholding on the previously tax-exempt amount transferred. For transfers done through December 31, 2015, the applicable rate will be 15%.