By: HUB’s EB Global Benefits Team

WHAT IS IT ABOUT?

Pay transparency and equity legislation is rapidly gaining momentum worldwide, with the European Union’s Pay Transparency Directive representing one of the most significant developments to date. Designed to close gender pay gaps and ensure transparent compensation practices, the Directive introduces broad requirements for employers around pay reporting, disclosure, and employee access to pay information. As more countries adopt similar measures, transparency is no longer just a compliance issue but a critical element of workforce strategy and employer reputation.

OVERVIEW OF THE REFORM

The 2026 Presidential Annual Program, officially published on October 30, 2025, announced the intention to create a new Supplementary Pension System (TES), converting the current voluntary Auto-Enrollment System (OKS) into a mandatory Pillar II pension system requiring both employer and employees to contribute. The Turkish government plans to formally introduce the TES framework in the second quarter of 2026.

Currently, most Turkish workers rely on the state pension system administered by the social security institution (SGK), requiring employer (11%) and employee (9%) contributions. The SGK offers a Defined Benefit pension upon retirement, which is funded on a Pay-As-You-Go basis. Employees are also entitled to a service-based severance benefit at retirement paid by the employer.

Additional retirement savings exist through the Private Pension System (BES), a voluntary defined contribution personal savings plan with government matching contributions of up to 30%. Since 2017 under the OKS law, employers have been required to auto-enroll employees into BES at 3% of salary, although employees may opt out if they do not wish to contribute.

Under TES, the OKS auto-enrollment system will be converted into a mandatory employer pension vehicle, effectively shifting BES from a voluntary individual savings program to a more structured occupational retirement benefit with predictable contributions.

KEY DESIGN ELEMENTS ANNOUNCED TO DATE

Based on government disclosures within the 2026-2028 Medium-Term Program and supporting updates, the TES initiative includes:

  • Required employer contributions (potentially 1% of salary) to employee TES accounts in addition to the employee and government contributions under the OKS.
  • Redesigned and more diversified pension investment funds to improve long-term returns for participants.
  • Employees will have the option to select an investment instrument with a different risk profile and time horizon.
  • Requirement to stay in the system at least 10 years or until the prescribed retirement age, if earlier.
  • Expanded eligibility for partial withdrawals from pension accounts, including special life events.
  • Financial literacy initiatives to increase employee understanding and engagement.

Although TES system is anticipated to start in the first half of next year, the transition plan and duration has not been released. Large private sector companies are expected to be included in the first stage with the scope expanded to others from there onwards.

IMPACT ON COMPANIES

  • Introduction of employer contributions to the new TES pension system will require companies to adjust total rewards budgets, compensation structures, and labor cost forecasts for Türkiye.
  • The shift from auto-enrollment to a mandatory employer pension system requires updates to payroll systems, benefits administration, legal/tax governance, and global plan documentation.
  • TES introduces a new retirement savings pillar, changing the competitiveness of benefit packages. Companies must decide how this interacts with existing benefits, while ensuring consistency with global benefit governance and market positioning.

SUGGESTED EMPLOYER ACTION

  • Quantify potential employer contribution requirements under TES and project multi year financial impact.
  • Determine how TES interacts with existing retirement or savings programs and whether plan design changes are necessary to maintain competitiveness.
  • The mandatory employee contribution will reduce the net take home salary. Employers should assess the need for changes to cash compensation structures or other compensation elements to offset required contributions.
  • Engage with payroll providers to ensure systems will be ready to calculate, track, and remit contributions and manage partial withdrawals and enrollment rules.
  • Create employee-ready materials explaining contribution levels, vesting, investment options, withdrawals, and financial impacts.

If you have any questions, please contact your HUB Advisor. View more updates in our Global Benefits Directory.