Constitutional Court Rules Voluntary Pension Funds Can Be Withdrawn in Full
The Constitutional Court (MK) has amended the rules regarding the disbursement of voluntary pension funds, which are paid for by workers themselves. The court removed the provision that limited the first withdrawal to a maximum of 20 per cent and now allows pension benefits to be withdrawn in a lump sum.
“Granting the petitioners’ request in part,” read the ruling for case number 139/PUU-XXIII/2025, as seen on the court’s website on Tuesday (30/6/2026).
The petition was filed by Alfonsius Londoran and others. The petitioners challenged Article 161 paragraph (2) and Article 164 paragraph (2) of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector.
The challenged articles stated:
Article 161 paragraph (2): Payment of Pension Benefits for Participants, Widows/Widowers, or children must be made periodically.
Article 164 paragraph (2): Pension Fund regulations may contain provisions governing the option of paying Pension Benefits for the first time in a lump sum of a maximum of 20% of the pension benefits.
The petitioners requested that the court declare these articles unconstitutional unless interpreted to allow for full lump-sum payments for voluntary pension participants.
In its ruling, the MK partially granted the petition. The court stated that pension benefits must be payable either in a lump sum or periodically. “The Court has emphasised the necessity of periodic payments for pension fund participants, without ruling out the possibility of lump-sum payments provided certain conditions are met, one of which is regulated in Article 164 of Law 4/2023,” the court stated. The MK also stressed the importance of establishing a separate Labour Law outside the Job Creation Law to improve pension regulation and called for harmonisation between pension fund rules and social security regulations.
The court’s binding ruling declared that Article 161 paragraph (2) and Article 164 paragraph (2) of Law Number 4 of 2023 are conditionally unconstitutional unless interpreted to allow voluntary pension fund participants, widows/widowers, or children to receive benefits in a lump sum or periodically, in accordance with their wishes and prevailing laws.