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PART III: FINANCIAL HIGHLIGHTS AND RISK MANAGEMENT
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND
ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
As at 31 December 2015 and 31 December 2014, the major actuarial assumptions used in the calculation of the total liability are as follows:
Current Period
Prior Period
Discount Rate
%10.20
%8.60
Estimated Inflation Rate
%7.10
%6.50
Increase in Real Wage Rate
%8.10
%7.50
Other benefits to employees
The Group has provided provision for undiscounted other employee benefits earned during the financial period (unused vacations, premium and
dividend) as per services rendered in compliance with TAS 19 in the accompanying consolidated financial statements.
The Group has provided provision for vacation that employees did not use until the relevant accounting period.
According to TAS 19, actuarial gains and losses have been accounted in “Other Capital Reserves” shown under “Equity” associated with “The Statement
of Gains and Losses Recognized in Equity” for the respective reporting periods.
Pension fund
The employees of the Parent Bank are the members of “Türkiye Vakıflar Bankası Türk Anonim Ortaklığı Memur ve Hizmetlileri Emekli ve Sağlık Yardım
Sandığı Vakfı” (“the Fund”) established on 15 May 1957 as per the temporary article no. 20 of the Social Security Law no. 506.
As part of Social Security Law’s 506 numbered, temporary article no.23, monthly income or salary is eligible for whose disabled with fund’s associates,
senility and death insurance is subjected according to the first paragraph of the temporary article no. 23 which states the Banks should transfer pension
funds to the Social Security Institution within three years after the 1 November 2005 dated and 25983 numbered Official Gazette, has been cancelled
by the Constitutional Court’s 22 March 2007 dated and 2007/33 numbered decision. Reasoned ruling of the Constitutional Court has been issued on 15
December 2007 in the Official Gazette no. 26731. The reason for the cancellation decision by Constitutional Court was stated as possible future losses
on acquired rights of Fund members.
Following the publication of the ruling, the Turkish Parliament started to work on new legal arrangements and the Social Security Law no. 5754 (“the
Law”) has been approved on 17 April 2008. The Law is enacted by the approval of the President of Turkey and issued on the 8 May 2008 dated and
26870 numbered Official Gazette.
In accordance with the temporary article no. 20 of the Article no. 73 of the Law;
The discounted liability for each fund in terms of the persons transferred as at the transfer date, including the contributors left the fund, should be
calculated by the assumptions below,
a) The technical interest rate to be used for the actuarial calculation is 9.80%.
b) Income and expenditures in respect to fund’s insurance division are considered in the calculation of discounted liability.
Law requires the transfer to be completed in three years beginning from 1 January 2008. The three year period has expired on 8 May 2011; however, it
has been extended to 8 May 2013 with the decision of Council of Ministers published in Official Gazette dated 9 April 2011. Before the expiration date,
with the decision of Council of Ministers published in Official Gazette dated 3 May 2013, the period for transferring banks, insurance and reassurance
firms, board of trade, exchanges or participants, monthly salary paid individuals and beneficiaries of the funds that are constructed for their personnel
to Social Security Institution in the scope of the temporary article no. 20 of the Social Security Law no. 506 published in Official Gazette dated 30 April
2014 extended for one year. The Council of Ministers has been lastly authorized to determine the transfer date in accordance with the last amendment
in the first paragraph of the 20th provisional article of Law No.5510 implemented by the Law No. 6645 on Amendment of the Occupational Health and
Safety Law and Other Laws and Decree Laws published in the Official Gazette dated 23 April 2015 numbered 29335.
The employer of pension fund participants (the Banks) will continue to pay the non-transferable social rights, which are already disclosed in the article
of association of the pension fund, to the pension participants and their right owners, even though the salary payment obligation has been transferred
to the Social Security Institution.
