Voluntary Participation (IPS) Auto Enrollment System (AES) Funds Legislation Data Center

Refund of Fund Expense Fee Total

 

Fund Expense Fee Total Refund

 

IV.  Explanation on the Fund Expense Fee Total (FEFT) refund

1.  The refund shall be made annually based on the contract according to the contract renewal date.

2.  No refund shall be made for the part of the deduction that is below 1.1 percent of the amount of accumulations present as of the calculation date. Example: For a contract with 100,000 Turkish lira of the amount of accumulations; if 1,800 Turkish lira have been deducted at a rate of 1.8 percent and 450 Turkish lira of refund have been found at a refund rate of 25 percent, 1,100 Turkish lira, or 1.1 percent of 100,000 Turkish lira, is checked against 1,350 Turkish lira. Then, a 450 Turkish lira refund shall be given since 1,350 Turkish lira is greater than 1,100 Turkish lira. Also in the same example; if 1,200 Turkish lira have been deducted at a rate of 1.2 percent and a 300 Turkish lira refund is calculated at a refund rate of 25 percent, 1,100 Turkish lira, or 1.1 percent of 100,000 Turkish lira, is checked against 900 Turkish lira. Then, only a 100 Turkish lira refund shall be given, bringing the deduction rate to over 1.1 percent. Nevertheless, the company practices in favor of the participant shall be reserved.

3.  The refund period shall be calculated based on the time spent in the contract starting from January 1, 2013. The period spent in the contract shall be calculated by taking into consideration all the time spent in the relevant contract starting from the first entry date into the system according to the contract transfer information. In case of ending up with residual years in the calculation, that period shall be rounded up.

Pension income plans fall within the scope of the refund. The refund for these plans shall be calculated based on the time spent in the contract starting from the date of transfer to the plan. The period that the participant had spend in the contract prior to transfer to the relevant pension plan shall not count. The refunds shall be transferred to the relevant funds according to the fund distribution rates stated in the participant's individual pension plan.

4.  The refund shall be made by each contract year-end after January 1, 2021 or in the event of contract termination after this date. Accordingly, the fund expense fee totals made prior to January 1, 2021 shall not be refunded.

5.  The refund shall not include the deductions made to pay for the necessary fund expenses.

6.  The fund types (Bonds and Bills Fund, Standard Fund, Index Fund, Equity Fund, Participation Fund, Composite Fund, Fund Basket Fund, Variable Fund, Life-Cycle/Target Fund) that fall under article 22(2) of the Regulation on the Private Pension System shall not be included in the performance deduction refund transactions.

 


Appendix-4

Refund Rate for the Fund Expense Fee Totala

Contract Year

Refund Rate

For the 6th year

2.5%b

a)    The company shall make the refund to the relevant participant or the participant's individual pension account within five business days following each contract year-end and contract termination date. The company shall pay for the losses arising from delay of refunds. If the refund is made to the participant's individual pension account, the refund shall be distributed by taking into account the fund distribution ratios stated in the participant's individual pension account at the time for the refund.

b)   The rates between the seventh and the 14th years shall be applied with a 2.5-percent increase for each year on the refund rate that was valid the previous year. A fixed 25-percent rate shall apply for the 15th year and later. Refund rates shall be determined by taking into account the full time period spent with the contract from January 1, 2013.

No refund shall be made for the part of the deduction that is below 1.1 percent of the accumulations present as of the calculation date. The deduction that causes the post-refund deduction amount to fall below the 1.1 percent-accumulation limit shall not be taken into consideration for refund.


ARTICLE 7 − The relevant participant, sponsor or employer shall have the right of withdrawal within two months after signature and approval of the documents determined by the Undersecretariat, with the exception of the pension income contracts, the contracts drawn up as per the transfers made pursuant to supplementary article 1 of the Law, the contracts drawn up by transfer from another company, and the transfer of vested accumulations. The company shall be informed via secure electronic communication tools or email in the event of using the right of withdrawal. The right of withdrawal shall be considered to have been used as of the date when the notification was received by the company. Payment orders shall be canceled at the latest on the business day following the date when the right of withdrawal notice was received by the company, and the participant’s accumulations in the individual pension account shall be refunded to the payer within 10 days after receiving the notification. Also, all deductions made by the company, except the fund expense fee total, shall be refunded to the relevant party within the same period. Any losses incurred due to late payment shall be collected by including the default interest that applies for the commercial transactions set forth pursuant to article 2 of the Law on Legal Interest and Default Interest No. 3095, dated December 4, 1984.


PART SIX

Entering the Employees into the Individual Pension System by the Employers Pursuant to Supplementary Article 2 of the Law

Employees to be entered into the system through their employers

Deductions

ARTICLE 22/N − (1) As part of the pension plans provided as per this article, the companies shall not make any deductions other than the fund management fee. Such deduction shall be set forth in the fund bylaw in rates not to exceed those established by the Minister. The Minister shall be authorized to re-determine the deduction structure and rates.

(2)  If the thresholds are exceeded, the Minister may decide to apply an additional fund management fee as per the principles set by him/her.

(3)  In the event of falling below the thresholds set by the Minister, the Undersecretariat may request the company to change the relevant portfolio management company, with approval of the Board.

(4)   The procedures regarding the fund expense fee total refund described in Appendix-4 shall not apply for the contracts within the scope of this section.

(5)   The company shall check daily if the daily deduction ratio stated in the fund bylaw is exceeded. If during the company's check, there is excess in the cumulatively calculated daily rates in relation to the daily average fund net asset value in the fund bylaw, the exceeding amount shall be reflected in the share price in the daily fund records. The exceeding amount, if any, over the rates stated in the fund bylaw by the end of the calendar year shall be refunded to the fund by the company within five business days following the related period.