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Financial Information and Risk
Management
İş Bankası
Annual Report 2013
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2013
XX. Liabilities Regarding Employee Benefits
1. Severance Indemnities and Short-Term Employee Benefits
According to the related regulation and the collective bargaining agreements, the Parent Bank and consolidated Group companies
(excluding the subsidiaries residing outside Turkey) are obliged to pay termination benefits for employees who retire, die, quit for
their military service obligations, who have been dismissed as defined in the related regulation or (for the female employees) who
have voluntarily quit within one year after the date of their marriage. Within the scope of TAS 19 “Employee Benefits”, the Parent
Bank allocates seniority pay provisions for employee benefits by estimating the present value of the probable future liabilities.
According to revised TAS 19, the actuarial gains and losses occurred after 1 January 2013 is recognized under equity. As the
legislations of the countries in which İşbank’s non-resident subsidiaries operate do not require retirement pay provision, no provision
liability has been recognized for the related companies. In addition, provision is also allocated for the unused paid vacation.
2. Retirement Benefit Obligations
İşbank Pension Fund (Türkiye İş Bankası A.Ş. Emekli Sandığı Vakfı), of which each employee of the Parent Bank is a member, has been
established according to the provisional Article 20 of the Social Security Act numbered 506. As per provisional article numbered
23 of the Banking Law numbered 5411, it is ruled that Bank pension funds, which were established within the framework of Social
Security Institution Law, will be transferred to the Social Security Institution, within 3 years after the publication of such law.
Methods and principles related to transfer have been determined as per the Cabinet decision dated 30 November 2006 numbered
2006/11345. However, the related article of the act has been cancelled upon the President’s application dated 2 November 2005, by
the Supreme Court’s decision dated 22 March 2007, Nr.E.2005/39, K.2007/33, which was published on the Official Gazette dated 31
March 2007 and numbered 26479 and the execution decision were ceased as of the issuance date of the related decision.
After the justified decree related to cancelling the provisional article 23 of the Banking Lawwas announced by the Constitutional
Court on the Official Gazette dated 15 December 2007 and numbered 26731, Turkish Grand National Assembly started to work
on establishing new legal regulations, and after it was approved at the General Assembly of the TGNA, the Law numbered 5754
“Emendating Social Security and General Health Insurance Act and Certain Laws and Decree Laws”, which was published on the
Official Gazette dated 8 May 2008 and numbered 26870, came into effect. The new law decrees that the contributors of the Bank
pension funds, the ones who receive salaries or income from these funds and their rightful beneficiaries will be transferred to the
Social Security Institution and will be subject to this Lawwithin 3 years after the release date of the related article, without any
need for further operation. The three-year transfer period can be prolonged for maximum 2 years by the Cabinet decision.
However related transfer period has been prolonged for 2 years by the Cabinet decision dated. 14 March 2011, which was published
on the Official Gazette dated 9 April 2011 and numbered 27900. In addition, by the Law “Emendating Social Security and General
Health Insurance Act”, which was published on the Official Gazette dated 8 March 2012 and numbered 28227, this period of 2 years
has been raised to 4 years after that related transfer period has been prolonged for one more year by the Cabinet decision dated 08
April 2013, which was published on the Official Gazette dated 3 May 2013 and numbered 28636.
The subject transfer period is extended for one year by the Council of Ministers on the 8 April 2013 published on the Official Gazette
dated on 3 May 2015 and numbered 28636.
On the other hand, the application made on 19 June 2008 by the Republican People’s Party to the Constitutional Court for the
annulment and motion for stay of some articles, including the first paragraph of the provisional article 20 of the Law, which covers
provisions on transfers, was rejected in accordance with the decision taken at the meeting of the afore-mentioned court on 30
March 2011.
The above mentioned law also states that;
• Through a commission constituted by the attendance of one representative separately from the Social Security Institution,
Ministry of Finance, Turkish Treasury, State Planning Organization, Banking Regulation and Supervision Agency, Savings Deposit
Insurance Fund, one from each pension fund, and one representative from the organization employing pension fund contributors,
related to the transferred persons, the cash value of the liabilities of the pension fund as of the transfer date will be calculated
by considering their income and expenses in terms of the lines of insurance within the context of the related Law, and technical
interest rate of 9.8%will be used in the actuarial calculation of the value in cash
• And that after the transfer of the pension fund contributors, the ones who receive salaries or income from these funds and
their rightful beneficiaries to the Social Security Institution, these persons’ uncovered social rights and payments, despite being
included in the trust indenture that they are subject to, will be continued to be covered by the pension funds and the employers of
pension fund contributors.
