According to Reuters, finance minister Naci Agbal said that the law will allow the private pension industry, worth TRY56bn (£14.6bn, €16.8bn, $18.8bn) from over 6.4 million customers, to expand as well as helping workers to increase their welfare during retirement.
The law, expected to come into force on 1 January 2017, means employees will have to contribute around 3% of their annual income – although this is subject to change by the Council of Ministers.
Employees will be given a list, approved by the undersecretariat of Treasury, of private pension companies to choose from.
In addition, the government will carry on with its 25% contribution to employees pension pots, as well as making a one-off TRY1,000 loyalty payment for employees who carry on with their pension plans for more than two months.
Employees looking to opt-out of the system will be able to exit it during this two-month probationary period, and have their savings returned.