Turkish mutual funds are made up of various sub-types of funds. Among these, pension funds are the most popular. Foreign investors come and set up pension funds in Turkey because of the recent legislation which has brought several changes to the pension system in this country. The Government has enabled the Individual Retirement Law which provides for the establishment of private funds in which employees may contribute voluntarily.
Our company registration agents in Turkey can offer more information on the latest laws related to setting up private pension funds in this country.
Until this year, Turkey relied on the state pension system which provided for Turkish companies and their employees to contribute to it. In May, the Government enabled the afore mention law which now allows foreign investors to open private pension funds which are allowed to collect the contributions of both employees and employers. The private pension system only complements the state pension pillar, it does not replace it. All Turkish pension funds must have clearly defined plans providing for these contributions.
Pension funds in Turkey may only be established under the form of mutual funds. Also, the Individual Retirement Law enabled a new type of company, the retirement company, which can set up a pension fund in Turkey. The minimum amount required to open a retirement company with the purpose of opening a pension fund is 14,285,714 USD. Half of the amount must be deposited upon the incorporation of the company. The retirement company is also required to establish three fund with different portfolios.
In order to create a pension fund in Turkey, investors must first register the retirement company with the Companies Register and then submit its incorporation documents together with the prospectus of the fund with the Capital Markets Board for approval. Just like for all other types of funds, the pension fund’s assets must be held by a custodian. A Turkish pension fund must invest at least 30% of its assets in governmental securities and may invest a maximum of 15% in the assets held by foreign funds.
For assistance in setting up a pension fund in this country, please contact our Turkish company formation representatives.