North Cyprus Provident Fund (İhtiyat Sandığı) Guide
This guide summarises the Provident Fund (İhtiyat Sandığı) in the Turkish Republic of Northern Cyprus: what it is, contribution rates, how it differs from social insurance and how the lump sum is earned. The information is compiled from public official sources.
What the Provident Fund is
The Provident Fund (Provident Fund Law, 34/1993) is a compulsory savings fund that accumulates in the employee’s name. It runs separately from social insurance and, instead of a monthly pension, provides a lump sum in qualifying situations such as leaving employment or retirement. Its purpose is to give the employee an end of service saving and extra security.
Contribution rates
The contribution is calculated on the employee’s gross wage and is made up of two equal parts:
| Party | Rate | Base |
|---|---|---|
| Employee premium | 4% | Gross wage |
| Employer deposit | 4% | Gross wage |
| Total | 8% | Gross wage |
The employer deducts the employee share from wages, adds its own share and pays the total to the Fund each month.
How it differs from social insurance
Social insurance provides ongoing cover for a monthly pension and risks such as sickness and work accidents. The Provident Fund is instead an individual account that accumulates and is paid out as a lump sum once earned. Both are compulsory and run in parallel; neither replaces the other.
Earning the lump sum
An employee who leaves work may as a rule claim their savings after a set waiting period. The main situations that allow earlier payment include:
- A female member who has given birth
- A male member completing military service
- Inability to work due to health or disability
- Starting full time higher education
- Members meeting the age and contribution day conditions for retirement
The waiting period may not apply to those who lose their jobs because a workplace closes or is wound up. See the payments page for current conditions.
Advance (partial payment)
Members who have completed a certain length of service may draw part of their savings as an advance while still working. For the conditions, including repayment of any earlier advance, review the advance page.
Summary for employers
- For each employee pay a 4% employee premium and a 4% employer deposit on gross wages.
- Register a new employee with the Fund on time.
- Track Provident Fund duties together with social insurance.
Frequently asked questions
Does the Provident Fund replace social insurance?
No. The two are separate and both compulsory; they run together.
When is the lump sum paid?
As a rule after a set waiting period once employment ends; it may be paid earlier in cases such as birth, military service, health and study.
Sources
This article is for general information only and rates and conditions may change with legislation. Contact us for calculations and process specific to your business.