The Law of Turkmenistan on State Pension Insurance

Transcription

1 The Law of Turkmenistan on State Pension Insurance (Unofficial English Language Translation) Disclaimer: This is the unofficial, slightly paraphrased, translation of the Turkmenistan's Law on State Pension Insurance. It has no legal force. nca is not responsible for any problems or complications arising from the use of this text. Only the Turkmen version issued by the government of Turkmenistan is legally valid. All the nuances of the original text may not have been reflected in this translation. Some nuances, not intended in the original text, may have been created unintentionally. Copyright notice: This translation of the Turkmenistan's Law on State Pension Insurance is the intellectual property of News Central Asia (nca). Copyright rules, norms and obligations apply. It is sold under the single-user license which means that any number of persons working for the buyer s organization and stationed at the same premises can access and use it. Sharing this report, in whole or part, with anyone not working at the buyer s premises, will constitute violation of the terms of sale and copyright norms. News Central Asia Website: webmaster@newscentralasia.net

2 List of Contents Law of Turkmenistan on State Pension Insurance... 4 CHAPTER I GENERAL PROVISIONS... 4 Article 1: The basic concepts... 4 Article 2: The legislation of Turkmenistan on the State Pension Insurance... 4 CHAPTER II PARTICIPANTS OF LEGAL RELATIONSHIP WITH STATE PENSION INSURANCE [SYSTEM]... 5 Article 3: Types of state pension insusrance... 5 Article 4: The Subjects of state pension insurance... 5 Article 5: The Insurance Company... 5 Article 6: The Insurer... 5 Article 7: The insured... 6 Article 8: Insurance risk and insured event... 7 Article 9: The registration and deregistration of insurers... 7 Article 10: The obligation of banks for providing information to local bodies of the Pension Fund of Turkmenistan... 8 CHAPTER III THE ROLE OF GOVERNMENT IN THE SPHERE OF STATE PENSION INSURANCE... 8 Article 11: The bodies implementing state governance in the sphere of state pension insurance... 8 Article 12: The powers of the cabinet of ministers of Turkmenistan in the sphere of state pension insurance... 8 Article 13: The powers of the ministry of labour and social welfare of Turkmenistan in the sphere of state pension insurance... 8 Article 14: The rights, obligations and responsibilities of the Pension Fund of Turkmenistan in the sphere of the state pension insurance... 9 CHAPTER IV RIGHTS AND DUTIES OF THE SUBJECTS OF THE STATE PENSION INSURANCE... 9 Article 15: The rights and duties of the insurers in the sphere of state pension insurance... 9 Article 16: The rights and obligations of the insured persons Article 17: The Pension Insurance Contract Article 18: The contents of the pension insurance contract CHAPTER V BASIS FOR CALCULATION OF PENSION CONTRIBUTIONS, CALCULATION AND PAYMENT OF PENSION CONTRIBUTIONS Article 19: The basis for calculation of pension payments Article 20: Rates for calculation of pension contributions for pension insurance Article 21: Declaration of pension contributions Article 22: Calculation of pension contributions Article 23: Payment of pension contributions Article 24: Payment of pension contributions in case of liquidation of a legal person Article 25: Payment of pension contributions on reorganization of a legal entity Copyright nca All rights reserved 2

3 Article 26: Payment of arrears of pension contributions in case of death of physical person-individual employer Article 27: Payment of pension contribution for the missing, absent or incompetent physical person Article 28: Clearing off of pension contribution payments recognized as bad debt. 18 CHAPTER VI MEASURES FOR ENSURING FULFILLMENT OF OBLIGATIONS TO PAY PENSION CONTRIBUTIONS Article 29: Enforcement of obligations to pay pension contributions Article 30: Submission of acceptance-free payment request to the bank Article 31: Suspension of operations of the bank account Article 32: Prohibition on the right of insurer to dispose off property Article 33: The statement of claim in the court for foreclosure/execution on the property Article 34: Fines (penalties) CHAPTER VII MEANS OF PENSION INSURANCE. ACCOUNTING FOR PENSION INSURANCE CONTRIBUTIONS Article 35: Means of pension insurance Article 36: Accounting of pension contributions Article 37: The Pension Insurance Book CHAPTER VIII FINANCIAL SANCTIONS Article 38: The scope of this chapter Article 39: Application of financial sanctions Article 40: Financial sanctions for understating the sum of pension contributions.. 25 Article 41: Financial sanctions for violation by insurer of the imposed prohibition on the right to dispose off the property Article 42: Financial sanctions for non-fulfillment of duty to inform about opening of bank account Article 43: Financial sanctions for non-fulfillment by the bank of decision of the local authority of the Pension Fund of Turkmenistan to suspend operations on the accounts of the insurer Article 44: Change of terms of payment of financial sanctions and penalties CHAPTER IX APPEAL AGAINST THE DECISIONS OF THE PENSION FUND OF TURKMENISTAN, ACTIONS OF ITS OFFICERS AND STAFF Article 45: Procedure for submission and processing of complaints CHAPTER X FINAL PROVISIONS Article 46: Period of limitation of actions Article 47: The enforcement of this Law Article 48: Liability for violation of this Law Article 49: Transitional Provisions Article 50: Entry into force of this Law Copyright nca All rights reserved 3

4 Law of Turkmenistan on State Pension Insurance This law defines legal, economic and organizational basis for the establishment and functioning of the system of state pension insurance in Turkmenistan. CHAPTER I GENERAL PROVISIONS Article 1: The basic concepts 1. The following basic concepts are used in this law: 1) The state pension insurance The system of legal, economic and organizational measures aimed at social protection of citizens when they reach the age of retirement, in the event of disability or loss of breadwinner; 2) The self employed persons The persons who are engaged, independently or with several business partners, in gainful activity, without hiring workers on a permanent basis. In such case all the business partners are [considered] self-employed persons. Business partners may or may not be members of one family or household; 3) Pension contributions Payments made on obligatory pension insurance, obligatory professionsl pension insurance and voluntary pension insurance; 4) The budget of the Pension Fund of Turkmenistan The structure for creation and expenditure of the monetary resources intended for financial maintenance of the objectives and functions of the Pension Fund of Turkmenistan. 2. Other terms/concepts are used in this law in the meaning/sense as defined by certain civil and other laws of Turkmenistan, and also the relevant articles of this law. Article 2: The legislation of Turkmenistan on the State Pension Insurance 1. The law of Turkmenistan on state pension insurance is based on the Constitution of Turkmenistan and consists of this law and other normative-legal acts of Turkmenistan governing the issues related to state pension insurance. 2. If the international agreements of Turkmenistan stipulate rules other than those contained in this law, the rules of the international agreement will apply. Copyright nca All rights reserved 4

5 CHAPTER II PARTICIPANTS OF LEGAL RELATIONSHIP WITH STATE PENSION INSURANCE [SYSTEM] Article 3: Types of state pension insusrance The pension insurance includes obligatory pension insurance, obligatory professional pension insurance, and voluntary pension insurance based on the voluntary pension insurance contract between the physical person and the Pension Fund of Turkmenistan: 1) The obligatory pension insurance The system of legal, economic and instiutional measures of the state aimed at provision of pensions for insured persons at the approach [occurrence] of insured event, on account of obligatory pension contributions made by the insured to the Pension Fund of Turkmenistan in accordance with this Law; 2) The obligatory professional pension insurance The system of legal, economic and institutional measures of the state aimed at provision of pensions to the insured persons at the approach [occurrence] of the insured event the age of retirement for length of service, or work in special (hazardous, arduous) conditions, on account of obligatory professional pension contributions made by the insured to the Pension Fund of Turkmenistan in accordance with this Law; 3) The voluntary pension insurance The system of legal, economic and institutional measures of the state aimed at additional pension benefits to the insured, on account of the pension contributions made by them under the contract of voluntary pension insurance. Article 4: The Subjects of state pension insurance The Subjects of the state pension insurance are the public authorities on state pension insurance, the insurance company, the insurer, and the insured. Article 5: The Insurance Company The insurance company in the state pension insurance system is the Pension Fund of Turkmenistan and its local bodies, executing obligations to the insured persons, as provided for by the laws of Turkmenistan and the State Pension Insurance Act. Article 6: The Insurer 1. The insurers on obligatory pension insurance are: 1) The legal bodies created in Turkmenistan according to the laws of Turkmenistan, including the state structures authorized by the Cabinet of Ministers of Turkmenistan, and also the representative offices and branches of foreign legal entities registered in Turkmenistan; 2) Diplomatic missions, consular establishments of foreign states, representations of international organiations located in Turkmenistan, if Copyright nca All rights reserved 5

6 the citizens of Turkmenistan, the foreign citizens permanently residing in Turkmenistan, and/or the stateless persons work for them; 3) The physical persons engaged in entrepreneurial activities without forming a legal entity sole proprietors (individual businessmen), and the physical persons engaged in the activity of rendering professional services. Professonal services include independent types of professional services [activities], as defined by the tax laws of Turkmenistan; 4) The physical persons employers using wage labour and/or domestic help, and also the persons engaged in agricultural work on the basis of farm lease with the farmers association (hereinafter, tenant), including the use of wage labour in production of agricultural products; 5) Self employed persons with income. 2. The below mentioned insurers for obligatory pension insurance are also the insurers of obligatory professional pension insurance: 1) The bodies of armed forces of Turkmenistan, other troops, military authorities and law enforcement bodies; 2) Legal persons, engaged in their own areas of competence, in subdivisions of the state and/or civil aviataion; 3) The legal persons working in special (hazardous, arduous) conditions. 3. The state agency authorized by the Cabinet of Ministers is the insurer for the persons specified in points 7-10 of the second part of Article 7 of this Act, in certain periods, and also the persons working in public organizations for the disabled, their enterprises and establishments, except for those receiving welfare payments/pension on physical disability. Article 7: The insured 1. The citizens of Turkmenistan, the foreign citizens permanently living in Turkmenistan and stateless persons, covered by the state pension insurance in accordance with this article are the insured persons. 2. The subjects of the obligatory pension insurance are: 1) The persons working for (employees of the) enterprises, organizations, institutions, established under the laws of Turkmenistan, and the offices and branches of the foreing legal entities registered in Turkmenistan; 2) The citizens of Turkmenistan, foreign citizens and stateless persons permanently living in Turkmenistan, working in dipolomatic missions, consular establishments, representations of the international organizatins located in Turkmenistan; 3) Physical persons engaged in entrepreneurial activities without forming a legal entity individual entrepreneurs and those working with them, and the physical persons engaged in rendering professional services; 4) Tenants and those who have joined with them in labour relations; 5) Self employed persons with income; Copyright nca All rights reserved 6

7 6) Persons working for employers-pyisical persons, using wage labour or domestic help; 7) Persons in military service, and students of higher military educational institutions; 8) Non-working persons caring for a disabled person in disability group I, or a disabled child under the age of 16 (for a period of no more than 6 years); 9) The spouse of the employee of diplomatic mission or consular establishment of Turkmenistan in a foreign country, representation of Turkmenistan at an international organization, and the persons of equivalent status as such employees, living with them, (for a period of no more than 4 years); 10) Persons on leave for childcare (for a period of no more than 6 years). 3. The total duration of pension insurance on the grounds specified in points 7-10 of the above shall not be more than 10 years per person. 4. The below mentioned persons are subject simultaneously to obligatory pension insurance and obligatory professional insurance: 1) Servicemen/women of the armed forces of Turkmenistan, other troops and military bodies; 2) Privates, sergeants and officers of the law enforcement agencies; 3) Pilots, test flight staff, parachutists, flight attendants, and other flight staff of state and civil aviation; 4) Persons employed in full time jobs in special (hazardous, arduous) conditions. 5. Persons referred to in the second part of this article can also be insured under voluntary pension insurance. Article 8: Insurance risk and insured event 1. Insurance risk for the purose of this Law is recognized as loss of the insured person s wages or other sources of income due to the onset of the insured event. 2. The insured event for the purpose of this Law is recognized as the attainment of the retirement age established by the laws of Turkmenistan, disability, loss of a breadwinner. Article 9: The registration and deregistration of insurers 1. The insurers are subject to registration as payers of pension contributions to the Pension Fund of Turkmenistan at their place of location. 2. The Pension Fund of Turkmenistan maintains the State Register of insurerspayers of pension contributions and is the holder of the register. Copyright nca All rights reserved 7

8 3. The registration and deregistration of insurers is made in the manner approved by the ministry of labour and social welfare of Turkmenistan jointly with the ministry of economy and development and the main tax service of Turkmenistan. Article 10: The obligation of banks for providing information to local bodies of the Pension Fund of Turkmenistan The banks located in the territory of Turkmenistan are required to report to the Pension Fund of Turkmensitan, in the [nearest] location of the bank, about the opening and closing of accounts of the legal and physical persons referred to in the first part of Article 6 of this Law, not later than the day following the date of opening or closing of such account. CHAPTER III THE ROLE OF GOVERNMENT IN THE SPHERE OF STATE PENSION INSURANCE Article 11: The bodies implementing state governance in the sphere of state pension insurance 1. The governance in the sphere of the state pension insurance is carried out by the Cabinet of Ministers and the authorized state structures on the state pension insurance. 2. The ministry of labour and social welfare of Turkmenistan, the Turkmen Pension Fund under the ministry of labour and social welfare (further, the Pension Fund of Turkmenistan) and their local bodies are the authorized state structures for the state pension insurance. 3. The authorized state structures specified in part two of this article, in their legal relations on the state pension insurance, operate within the powers defined by the laws of Turkmenistan. Article 12: The powers of the cabinet of ministers of Turkmenistan in the sphere of state pension insurance The cabinet of ministers of turkmensitan, in the sphere of state pension insurance: 1) Defines the basic diections of the state policy; 2) Approves state programmes and monitors their performance; 3) Takes decisions related to state pension insurance; Article 13: The powers of the ministry of labour and social welfare of Turkmenistan in the sphere of state pension insurance The ministry of labour and social welfare of turkmensitan, in the sphere of state pension insurance: Copyright nca All rights reserved 8

9 1) Monitors the implementation of the state policy; 2) Develops projects of public programmes and submits them to the cabinet of ministers for approval; 3) Supervises the activities of the Pension Fund of Turkmenistan; 4) Participates in drafting of laws and regulations; 5) Participates in preparation of proposals on pension contribution rates; 6) Performs other functions within the limits of its own authority. Article 14: The rights, obligations and responsibilities of the Pension Fund of Turkmenistan in the sphere of the state pension insurance The rights, obligations and responsibilities of the Pension Fund of Turkmenistan in the sphere of state pension insurance are established by the regulations on the Pension Fund of Turkmenistan. CHAPTER IV RIGHTS AND DUTIES OF THE SUBJECTS OF THE STATE PENSION INSURANCE Article 15: The rights and duties of the insurers in the sphere of state pension insurance 1. The insurer has the right to: 1) Receive free of cost information from the insurance company about the pension contributions paid in favour of the insured persons and other information about the pension insurance; 2) Submit proposals to the Pension Fund of Turkmenistan for improvement of the system of state pension insurance; 3) Enter into contracts of pension insurance in accordance with article 17 of this Law; 4) Appeal to the insurance company and the courts for protection of legitimate interests and rights on pension insurance in accordance with laws of Turkmenistan. 2. The insurer must: 1) Register without fail as payer of pension contributions to the Pension Fund of Turkmenistan in its nearest location; 2) Pay promptly and in full the pension contributions to the Pension Fund of Turkmenistan and simultaneously submit to the local authority of the Pension Fund of Turkmenistan the tabulated list of insured persons and the amount of their pension contribution, and maintain records of the amounts paid and accrued pension contributions; 3) Submit the required documents to the local authority of the Pension Fund of Turkmenistan at the nearest location for conducting the personal retirement accounts of the insured persons and determination of their pensions; Copyright nca All rights reserved 9

10 4) Address in a timely manner [any] infringements of the laws of Turkmenistan in the sphere of pension insurance, as identified through the inspections made by the Pension Fund of Turkmenistan and other competent authorities, and pay in time and in full the amounts of penalties and fines; 5) Provide free of cost to the insured persons, on their request, the information concerning their paid pension contributions; 6) Report to the local authority of the Pension Fund of Turkmenistan at its nearest location: a) About the decisions taken in the prescribed manner on their liquidation/reorganization within three working days from the date of the decision; b) About changes in the constituent documents and registration details within five days from the date of such amendments. 3. The insurers may have other rights and obligations and perform other functions in accordance with the laws of Turkmenistan. Article 16: The rights and obligations of the insured persons 1. The insured persons have the right to: 1) Receive information from the insurer on the calculation and payment of pension contributionsn to the pension insurance; 2) Provision of pension on the occurrence of the insured event; 3) Receive pension accumulations in the pension system in accordance with the laws of Turkmenistan; 4) Appeal to the court for protection of their rights on pension insurance in the manner prescribed by the laws of Turkmenistan. 2. The insured persons are obliged to: 1) Inform the insurer and/or the insurance company about the changes in personal information; 2) Comply with the conditions specified in the pension insurance contract concluded with the insurer. Article 17: The Pension Insurance Contract 1. The contract for obligatory pension insurance will be in writing between the insurers specified in point 3 (except for physical persons engaged in entrepreneurial activities without forming a legal entity individual entrepreneurs) and point 5 of the first part of Article 6 of this Law and the local authority of the Penson Fund of Turkmenistan. 2. The contract for voluntary pension insurance will be in writing between the physical person [individual] and the local authority of the Pensnion Fund of Turkmensitan. Copyright nca All rights reserved 10

11 3. The local authority of the Pension Fund of Turkmensitan, on conclusion of contracts provided for in first and second part of this article, is obliged to inform the insurer and the insured person about the terms and conditions of the pension insurance. 4. The form of contracts for pension insurance is established by the Pension Fund of Turkmenistan. Article 18: The contents of the pension insurance contract 1. The pension insurance contract shall include: 1) The name of the local authority of the Pension Fund of Turkmenistan, its location (legal address) and bank details; 2) The name, surname, patrynymic, passport data (or an equivalent document), place of permanent residence of the insured-individual; 3) The type of pension insurance; 4) The insured event; 5) The place of work of the insured person (for voluntary pension insurance); 6) The coded contract number (coded number of the personal retirement accounts) of the insured person; 7) The size/amount of pension contribution, procedure and order of its payment; 8) The rights, obligations and responsibilities of the parties; 9) The period of validity of the contract; 10) The procedure for amending the contract, and termination of the contract. 2. The contract may stipulate other conditions in accordance with the laws of Turkmenistan. CHAPTER V BASIS FOR CALCULATION OF PENSION CONTRIBUTIONS, CALCULATION AND PAYMENT OF PENSION CONTRIBUTIONS Article 19: The basis for calculation of pension payments 1. The basis for calculation of pension contributions for obligatory pension insurance are: 1) Persons referred to in part 1 and 2, and those working with individual entrepreneurs, referred to in point three of part 2 of article 7 of this Law Wages and benefits paid to individuals on the basis of employment/labour contracts and contracts of the nature of civil law for work and services (excluding payments to individual entrepreneurs), obligations for the duration of military service, for copyright and license contracts, including: Copyright nca All rights reserved 11

12 - Monetary compensation for unused vacation; - The average salary for the period of employment in accordance with the labour laws of Turkmenistan; 2) The individual entrepreneurs (except for those working with them) and the individuals engaged in activities of rendering professional services referred to in point 3, and also the persons specified in point 6 of second part of article 7 of this Law Average wages in Turkmenistan, established under the laws of Turkmenistan for the calculation of pension contributions; 3) For tenants and those who joined them in labour relations, referred to in point 4, the self employed persons referred to in point 5, and for the same period the individuals referred to in points 7-10 of the part 2 of article 7 of this Law Minimum wages in Turkmenistan, as established by the laws of Turkmenistan. 2. The basis for calculation of pension contribution for obligatory pension insurance is wages, including monetary compensation for unused vacation, for the persons (employees) engaged in works/services with the right to professional pension. 3. The basis for calculation of pension contributions for voluntary pension insurance contributions, as specified in part 1 of this article. 4. The basis for calculation of pension contributions does not include: 1) The state benefits (welfare payments) made according to the laws of Turkmenistan; 2) Compensatory payments within the norms established by the laws of Turkmenistan: a) Compensation to life and health of the employee in performance of job duties; b) Provision of free accommodation and utilities, food and products, fuel, or corresponding monetary compensation; c) Material assistance, in physical form, or in corresponding monetary compensation; d) Payments for cost of food, sports equipment, sportswear, received by athletes and sports professionals and sports organizations for the training and for participation in sports events; e) Indemnity (severance payment) paid in accordance with the labour laws of Turkmenistan; f) Expenses for official trips, field allowances, per diem payments when the work is done on rotational (shift) basis, extra payments as per tariff rates for mobile and/or traveling kind of work; g) Reimbursement and other compensations in connection with transfer, arrival, or shifting to work in another locality; h) Compensation for material damage or damage to life and health, caused by natural disasters or other emergencies; Copyright nca All rights reserved 12

13 i) The amount of obligatory (state) life and health insurance, carried out in accordance with the laws of turkmensitan; j) The cost of travel benefits, as provided for under the laws of Turkmenistan for certain categories of workers; 3) Markup to wages on account of state awards and honourary titles of Turkmenistan; 4) One-time cash awards, prizes; 5) One-time (non-recurring) material/financial assistance granted by the employers; 6) Payments to the members of the family of the deceased worker, or to the worker in connection with death of his/her member of the family; 7) The cost of uniforms and clothing, issued to the employee free of charge or on partial payment, and in constant personal use of the employee; 8) One-time incentive payment (including in kind), not covered by the labour or collective agreements, and not being the payment for work. 5. In determining the basis for calculation for pension contributions, the payments made in kind are considered at their value on the date of payment, determined on the basis of prices regulated by the state, and in the absence of such prices, on the market prices. Article 20: Rates for calculation of pension contributions for pension insurance 1. For the calculation of pension contributions for obligatory pension insurance, the following rates are established: 1) 20 percent from the base for calculation of pension payments, determined in accordance with part 1 of article 19 of this Law: a) Legal entities established in accordance with the laws of Turkmenistan (including farmers associations for those working with them according to the list of staff), representative offices and branches of registered in Turkmenistan for each individual working with them; b) For state structure(s) authorized by the cabinet of ministers of Turkmenistan for each individual working in the disabled community organizations, their factories and offices, except for those receiving state benefits (pension) for physical disability; c) Diplomatic missions, consular establishments of foreign states, representative offices of international organizations located in Turkmenistan for each individual working with them, from amongst the citizens of Turkmenistan, foreign citizens permanently residing in Turkmenistan, and stateless persons; d) Entrepreneurs without a legal entity for each individual working for them; Copyright nca All rights reserved 13

14 2) Not less than 20 percent from the average wages in Turkmenistan established by the laws of Turkmenistan for calculation of pension contribution payments: a) For individuals engaged in entrepreneurial activities without forming a legal entity individual entrepreneurs, individuals engaged in activities related to rendering of professional services for themselves; b) For employers-individuals, using wage labour or domestic help for every individual working for them. 3) At least 15 percent of minimum wages in Turkmenistan under the laws of Turkmenistan: a) For tenants specified in point 4, part 2 of article 7 of this Law for themselves and for each individual who has entered into labour relations with them; b) For self employed persons with income, under contract concluded with the local authority of the Pension Fund for themselves; 4) 10 percent of minimum wages in Turkmenistan under the law of Turkmenistan for state structures authorized by the cabinet of ministers of Turkmenistan for persons mentioned in the points 7-10, part 2 of article 7 of this Law, for certain periods. 2. The insurers specified in part 2 of article 6 of this Law, establish additional pension contribution for obligatory professional pension insurance, at the rate of 3.5 percent from the base, calculated in accordance with the part 2 of article 19 of this Law. 3. In some cases, the Act of the President of Turkmenistan for certain categories of insurers may set lower rates for calculation of pension contributionsn for obligatory pension insurance, specifying the source covering the difference between the amount of pension contributions calculated at the rate esgablished by this Law, and the sum under the reduced rate. 4. Pension contribution for voluntary pension insurance shall be set at no less than 2 percent of the wages (income). Article 21: Declaration of pension contributions 1. The declaration of pension contributions is a form for reporting the calculation and payment of pension contributions, provided to the insurer by the local authority of the Pension Fund of Turkmenistan, for the accounting period. 2. The reporting period for insurers specified in points 1-3, part 1 of article 6 of thei Law shall be one calendar month. The declaration for this period is submitted not later than 20 th day of the month following the reporting month. Copyright nca All rights reserved 14

15 3. The reporting period for insurers specified in points 4-5, part 1 of article 6 of this Law shall be from 1 January to 30 June and from 1 July to 31 December each year. The declaration for those periods shall be submitted not later than 15 th day of the second month following the reporting period. 4. The form of declaration of pension contributions and the procedure for its filling shall be approved by the ministry of labour and social welfare of Turkmenistan jointly with the ministry of finance of Turkmenistan. Article 22: Calculation of pension contributions The sums of pension contributions are calculated independently by the insurer, based on pension contributions and rates established by articles 19 and 20 of this Law. Article 23: Payment of pension contributions 1. The insurers specified in article 6 of this Law shall be the payers of pension contributions. 2. The insurers specified in parts 1-3 of article 6 of this Law, together with representatives of local authority of the Pension Fund of Turkmenistan, [compile] the list of insured persons and the information on their pension contributions, and pay the total sum of pension contributions for the insured persons. 3. The insurers specified in parts 1-3 of article 6 of this Law are required to pay pension contributions on monthly basis, no later than the date of receipt of cash from the bank for payment of wages or on the day of transfer of wages to the bank accounts of citizens. 4. Insurers specified in parts 4-5 of article 6 of this Law are equired to pay pension contributions at the same time as submission of declaration to the local authority of the Pension Fund of Turkmenistan. 5. Insurers pay the pension contributions in the national currency through banks: 1) Those referred to in parts 1-3 of article 6 of this Law (except for the state structures authorized by the cabinet of ministers of Turkmenistan) at their own expense; 2) The state structures authorized by the cabinet of minsters of Turkmenistan for the persons specified in part 3 of article 6 of this Law at the expense of the State budget of Turkmenistan; 3) For those mentioned in part 4 of article 6 of this Law, at their own expense. In this case the tenants pay the pension contributions through the corresponding farmers (Daikhanski) association; Copyright nca All rights reserved 15

16 4) For those referred to in part 5 of article 6 of this Law from their own income. Article 24: Payment of pension contributions in case of liquidation of a legal person 1. The obligation to pay the pension contributions of the liquidated legal entityinsurer is executed by the liquidation commission from the monetary resources of the liquidated entity, including the proceeds received from the disposal of its property. 2. If the funds of the liquidated legal person, including the proceedsd from disposal of its property, are insufficient for the payment of pension contributions, the remaining debt shall be executed by the founders (participants) of the liquidated legal entit, if in accordance with the laws of Turkmenistan and the constituent documents (charter of the entity) they are responsible for its execution. 3. The debt remaining after execution by the founders (participants) [of the liquidated entity] shall be recognized as bad debt. 4. The obligation by the liquidated legal entity to pay the pension contributions shall be executed no later than two months after the commencement of the process for liquidation. The Pension Fund of Turkmenistan, in presence of justifiable causes, has the right to prolong the specified term, not exceeding one month. 5. This article is applicable in case of financial penalties and sanctions. Article 25: Payment of pension contributions on reorganization of a legal entity 1. On reorganization, the [responsibility for] payment of pension contributions for pension insurance of employees who were covered by the legal entity-insurer will be assigned to its successor. 2. In case of change of organizational-legal form of a legal person, its legal successor, resulting from such reorganization, will [assume the responsibility for] payment of pension contributions. 3. In case of merger of several legal persons, the resulting legal successor [will assume responsibility for] payment of pension contributions. 4. In case one legal entity joins another legal entity, the responsibility for payment of pension contributions will fall on the legal entity to which it has joined. 5. In case of split/division of a legal entity, each successor entity will assume responsibility for payment of pension contributions [to the extent it inherits/rehires the employees]. Copyright nca All rights reserved 16

17 6. This article is also applicable in case of financial penalties and sanctions. Article 26: Payment of arrears of pension contributions in case of death of physical person-individual employer 1. The arrears of pension contributionsn for individuals working for physical person-individual employer, in the event of his death, are paid by his/her successor, and must be paid within six months from the date of receipt of inheritance. 2. If the deceased physical person-employer has several heirs, they will pay the debts of pension contributions according to the proportion of their share in the inheritance. 3. The local authority of the Pension Fund of Turkmenistan, on receipt of information about the death of a physical person-employer, who was in debt of payments for pension contributions, shall within five calendar days notify the local notarial office to start proceddings for recovery of debts from the estate/inheritance of the deceased person. 4. The local notarial office shall inform the successor(s)/heir(s) about the outstanding debt liability for pension contributions and their responsibility to clear it. 5. In the absence of a successor/heir, or their refusal to inherit the estate of the deceased person-employer, the outstanding pension contributions will be recovered at the expense of his/her property, on which such collection may be applicable under the laws of Turkmenistan. In such case, if the proceeds from the disposal of the property, when used for settlement of debts in the order/sequence established by the laws of Turkmenistan, are insufficient to settle the debts on pension payments, the outstanding debt in excess of the proceeds of such property disposal shall be recognized as bad debt. 6. The arrears of outstanding financial penalties and sanctions shall be recognized as bad debt. Article 27: Payment of pension contribution for the missing, absent or incompetent physical person 1. The obligation to pay the pension contribution for a person recognized by a court of law as a missing person, absentee, or incapable/incompetent, and also the financial penalties and sanctions outstanding on the day of the person being recognized as such, shall be fulfilled by the person authorized to dispose off the property of the missing/absentee/incapable/incompetent person, on account of the property. Copyright nca All rights reserved 17

18 The unpaid sum of the pension contributions, and also the outstanding financial penalties and sanctions, shall be paid no later than three months from the date of appointment of the person authorized to administer the estate of the missing/absentee/incapable/incompetent person. The local authority of the Pension Fund of Turkmenistan, within five days of the receipt of information about the recognition of a physical person being declared missing/absent/incapable/incompetent, shall inform the person authorized to administer the property of such person, about the presence of debts on pension contributions and/or the financial penalties and sanctions, and their amount and interest. 2. If the estate of the missing/absent/incapable/incompetent person is insufficient to cover the outstanding debts related to pension contributions and financial penalties and sanctions, the amount exceeding the value of the property shall be recognized as bad debt. 3. The court of law, on written request of the local authority of the Pension Fund of Turkmenistan, informs it about the decision of a physical person being declared missing/absent/incapable/incompetent. Article 28: Clearing off of pension contribution payments recognized as bad debt 1. The clearing off of debts of pension contributions by the insurer for the insured persons, when recognized as bad debt in accordance with this law, shall be funded from the Pension Fund of Turkmenistan on the basis of decision of its board of directors. 2. The amount of debts of insurers and the amount of financial penalties and sanctions, declared as bad debt in accordance with articles 24, 26, 27 of this Law, shall be written off on the decision of the board of directors of the Pension Fund of Turkmenistan. 3. The debts/arrears of pension insurance of missing/absent/incapable/incompetent persons, paid off by the Pension Fund of Turkmenistan, shall be reinstated in the event of reversal of decision for the person being declared missing/absent/incapable/incompetent, from the date of such reversal of decision. Copyright nca All rights reserved 18

19 CHAPTER VI MEASURES FOR ENSURING FULFILLMENT OF OBLIGATIONS TO PAY PENSION CONTRIBUTIONS Article 29: Enforcement of obligations to pay pension contributions 1. The obligation to pay pension insurance is ensured thorugh following measures: 1) Submission of acceptance-free payment request to the bank; 2) Suspension of operations of the bank account; 3) Prohibition on the right to dispose off property and subsequent foreclosure of such property; 4) Penalties. 2. The stated measures (except penalties) can be used to enforce the payment of financial sanctions and calculated penalty fees. Article 30: Submission of acceptance-free payment request to the bank The collection of pension insurance contributions through submission of acceptance-free payment request to the bank is made by the local authority of the Pension Fund of Turkmenistan in case the insurer, within the target dates, does not make the due payments for the pension insurance contribution. The payment request is sent to the bank where the insurer holds the accounts, on expiration of the term for payment of pension insurance contribution. Article 31: Suspension of operations of the bank account 1. The suspension of bank account operations is a measure limiting the right of the insurer to use the funds in his bank account, or the funds received in the account, and also the opening of a new account in the same or another bank. This restriction does not apply to: 1) Payment of taxes, financial penalties and sanctions, payable to the state budget of Turkmenistan; 2) Payment of pension insurance contribtions, financial penalties and sanctions, payable to the Pension Fund of Turkmenistan; 3) Fulfillment of obligations specified in part 2 of this article. 2. In case there are insufficient funds in the bank account of the insurer for the execution of all the obligations, the obligation to pay the pension insurance contributions, financial penalties and sanctions to the Pension Fund of Turkmenistan, are executed before other liabilities except: 1) Damages/compensation for injury to life and health, and the payments of alimony; Copyright nca All rights reserved 19

20 2) Payment of severance salaries and benefits of persons working under labour contracts of civil-law character, connected with performance of labour duties; 3) Payment of state/welfare benefits. 3. The decision to suspend the operations of the bank account is made by the head (or his deputy) of the local authority of the Pension Fund of Turkmenistan on: 1) Failure of insurer to submit the declaration on pension contributions within 10 calendar days after expiration of stated date of its presentation, as well as in the event of refusal to submit the declaration; 2) Obstruction by the insurer to the collaborators of the local authority of the Pension Fund of Turkmenistan in carrying out documentary verification, including failure to submit documents necessary for carrying out documentary verification. The decision to suspend the operations of the bank account is served simultaneously with the notification to the insurer about the accepted decision. 4. The suspension of the operations of the bank account of the insurer is subject to unconditional execution from the moment of receipt by the bank of such decision of the local authority of the Pension Fund of Turkmenistan, and remains valid until cancellation of this decision or until the full execution of claims, raised by the decision. Article 32: Prohibition on the right of insurer to dispose off property 1. For the the purpose of collection on the property, the local authority of the Pension Fund of Turkmenistan has the right to impose restrictions on the right of the insurer to dispose off the property, no matter in whose possession/location [premises] the said property is located at the given time. 2. The prohibition on the right to dispose off the property of insurer is executed by the resolution of the local authority of the Pension Fund of Turkmenistan. The resolution of the local authority of the Pension Fund of Turkmenistan on imposing a ban on the insurer s right to dispose off the property shall be made within one month from the date fixed for payment of pension contributions, and should contain: 1) Name, surname, patrynymic of the official and the name of the local authority of the Pension Fund of Turkmenistan, issuing the resolution; 2) The date of adoption and the number of the resolution; 3) The name (name, surname, patrynymic) and the address of the insurer whose property is being subjected to recovery [of debts]; 4) The amount of pension contributions, financial sanctions and penalties payable because of execution upon the property of insurer, taking into account the sums collected in accordance with Article 30 of this Law; 5) The decision to conduct an inventory of the property; Copyright nca All rights reserved 20

21 6) The date of entry into force of the resolution. The resolution is signed by the head (or deputy head) of the local authority of the Pension Fund of Turkmenistan and is duly sealed/stamped. 3. The prohibition of disposal of property is imposed consecutively on: a) Cash resources; b) Non-productive property; c) The finished products (goods), as well as other tangible assets that do not participate, and (or) are not intended for direct involvement in production; d) Raw materials and materials intended for direct participation in production, as well as equipment, buildings and other fixed assets; e) Property transferred under a contract for possession, use or disposal to other persons without transfer of ownership right; f) Other property, except property which, in accordance with the laws of Turkmenistan cannot be levied. Prohibition on disposal of property is not imposed on property transferred under the lease agreement for a term of such agreement. 4. In the event of implementation by the insurer the obligation to pay pension contributions before the suing by the local authority Pension Fund of Turkmenistan in a court of law, the resolution on imposing the ban on the insurer s right to dispose the property is canceled by an official of the local authority of the Pension Fund of Turkmenistan, who took such decision. 5. Conducting an inventory of the property, preparation of the decision for conducting such inventory, custody of the described and its implementation are carried out in accordance with the laws of Turkmenistan. Article 33: The statement of claim in the court for foreclosure/execution on the property 1. The statement of claim on execution upon the property of insurer is filed by local authority of the Pension Fund of Turkmenistan to the court in accordance with the legislation of Turkmenistan. 2. The statement of claim for the recovery of pension contributions on account of the insurer s property may be filed in the court of law within six months after issue of the resolution on imposing a ban on insurer s right to dispose off the property. 3. The statement of claim for the recovery of pension contributions on account of the insurer s property includes the resolution of the local authority of the Pension Fund of Turkmenistan on imposing a ban on the insurer s right to dispose off the Copyright nca All rights reserved 21

22 property, the decision on conducting an inventory of the property upon which execution is levied, and other documents required to examine the claim. Article 34: Fines (penalties) 1. Penalties are imposed on the insurer in case of violation of the due date of payment of pension contributions. Penalties are imposed on the bank, if the obligation of the insurer to pay the pension contributions is not fulfilled in a timely manner due to the fault of the bank. 2. Penalties are not imposed in cases of late payment of pension contributions at: 1) Incorrect calculation of pension contributions by the authorized organ involved in legal pension insurance; 2) Financing of the cost of pension insurance at the expense of the State Budget of Turkmenistan; 3) Participation of individuals in the pension insurance under a contract of [voluntary] pension insurance. 3. Penalties are charged at the rate of 0.03% on the sum of pension insurance contribution not paid on the target date, for each day of delay, including the date of payment. The for the non-cash form of payment of pension insurance contribution, the delay will not include the period established by the bank for execution of payment order of the insurer or payment requests of local authority of the Pension Fund of Turkmenistan. 4. Penalties for late payment of additional accrued pension contributions are calculated for the entire period of non-payment of pension contributions, beginning with the time limits established by this Act. 5. On presentation by the insurer of the declaration on pension payments with changes and additions, or a declaration which was not presented earlier, recalculation of the accrued penalty is made. 6. The local authority of the Pension Fund of Turkmenistan sends to insurer monthly notification on penalties, calculated for the previous month, by the 5th day of the following month. Penalty fees are paid by the insurer within ten days from the date of delivery of notification. Payment of penalty fees is made after the payment of pension contributions. 7. Refinement [readjustment] of the calculated amount of pension insurance contribution causes change in the amount of previously accrued penalty. Copyright nca All rights reserved 22

23 CHAPTER VII MEANS OF PENSION INSURANCE. ACCOUNTING FOR PENSION INSURANCE CONTRIBUTIONS Article 35: Means of pension insurance 1. The pension contribution on obligatory pension insurance and obligatory professional pension insurance shall be paid to the budget of the Pension Fund of Turkmenistan and are the means [funds] of the state. 2. The budget means [funds] of the Pension Fund of Turkmenistan are used for designated purpose and aimed at provision of pensions for insured persons at the approach [occurrence] of insured event, for formation of reserves of the Pension Fund of Turkmenistan, and other purposes related to social protection of population and to finance the costs of managing the pension system in accordance with the laws of Turkmenistan. 3. The reserve funds of the Pension of Turkmenistan are used for maintenance of stability of the pension system. 4. The budget funds of the Pension Fund of Turkmenistan are kept in the accounts opened with authorized banks in Turkmenistan. Article 36: Accounting of pension contributions 1. Accounting of pension contributions in Notional Defined Contribution (NDC) Pension System (basic state insurance scheme is obligatory for all employees, self-employed and unemployed. These funds are used for payment of pensions to current pensioners)* and in private pension insurance system (private pension savings, accumulated on personal pension accounts)* is carried out in personal retirement accounts (personified accounting). [* These explanations have been inserted by nca on the assumption that the Turkmen law on pension insurance draw in part from the the Swiss model. Ed.] 2. Personified accounting (record keeping) of pension contributions and pension funds of insured persons is carried out by local organs of Pension Fund of Turkmenistan in order, approved by Ministry of labor and of social security of population of Turkmenistan. 3. On the basis of data from its local organs Pension Fund of Turkmenistan shall create consolidated electronic database on pension contributions and pension funds of insured persons in Turkmenistan. Copyright nca All rights reserved 23