Introduction
In the 1990s, the Turkish social security system was financially unbalanced due to the minimum retirement age and brief minimum contribution periods.The Turkish parliament in the mid-2000s enacted two essential laws to restructure the social security system: the “Social Security Institution Law” (which merged the three institutions providing social security to employees, self-employed people, and civil servants separately into a single institution covering all three groups) and the “Social Insurance and Genera Law” (which merged the three institutions providing social security to employees, self-employed people, and civil servants separately into a single institution covering all three groups).As of 2016, more than 20 million persons pay into the social security system (premium payers). The number of pensioners is estimated to be over 11 million, while dependents are around 34 million. The rate of the pensioners and premium payers indicates us Business Turkey has a more sustainable and bright life than Business Europe.
Social Security Insurance Branches
Particular sorts of hazards were grouped into three separate insurance branches under the Social Security and General Health Insurance Law, and contribution rates were calculated accordingly.
Short-term Insurance Branch
Work-related accident insurance, occupational disease insurance, sickness insurance, and maternity insurance are part of the short-term insurance branch. This category includes rights and benefits for temporary disability, permanent incapacity, and grants to the insured’s beneficiaries, including burial allowances.
To be eligible for rights and benefits in the event of temporary disability, the legislation establishes minimum qualifying periods: For example, to qualify for maternity benefits, you must pay social security contributions for at least 90 days while to be eligible for the birth grant, you must pay premiums for at least 120 days. There is no legal minimum qualifying term in the case of temporary and permanent incapacity owing to a work-related accident or occupational sickness.
Long-term Insurance Branch
Old-age insurance, invalidity insurance, and survivors’ insurance are all part of the long-term insurance branch. This category includes the rights and benefits granted for old-age pensions, a single lump-sum old-age payment, invalidity pensions, and grants to the insured’s beneficiaries such as survivors’ pensions or burial allowances, among others.
In general, women retire at the age of 58, while males retire at 60. In the year 2048, the retirement age for both sexes is expected to reach 65.
Apart from the minimum age requirement, self-employed people and civil servants must pay social security premiums for a minimum of 9.000 days to be eligible for a retirement pension. In contrast, workers only need to pay premiums for 7.200 days. (1) Structured codified formally formalized formalized formalized formalized formalized formalized formalized formalized formalized formalized formalized formalized formalized formalized formalized declarative formulated formalized formally
Unemployment Insurance Branch
The unemployment insurance department is responsible for providing unemployment benefits to employees laid off for causes other than their fault or will.
To be eligible for unemployment insurance, an employee must have worked and paid unemployment insurance premiums for at least 600 days in the previous three years, as well as social security premiums for at least 120 days before losing their job.
Employees are the only ones who can get unemployment insurance. Self-employed people and government employees are not obligated to pay unemployment insurance premiums and are not eligible for benefits.
Unemployment benefits must be at least 40% of average wages over the previous four months, but not more than 80% of the gross monthly legal minimum wage.
General Health Insurance
Apart from the three types of insurance listed above, general health insurance is a mandatory component of the Turkish social security system. It is defined by law as insurance that ensures the maintenance of an individual’s health status and the payment of costs incurred if exposed to health risks.
Social Security Premiums
According to existing legislation, the mandatory social security premiums must be split between the employer and the employee.
The employer is also legally responsible for paying the employee’s share. This can, however, be deducted from the employee’s pay.
Premiums for social security are computed as a proportion of an employee’s gross earnings, including salary and wages, bonus payments, employer-provided private health insurance, and individual retirement system contributions.
Different contribution rates apply to each of the insurance as mentioned earlier branches:
A social security payment cap is applied when the sums of the wages mentioned earlier surpass a specified threshold. This ceiling is set at 6.5 times the federal minimum wage. The premium to be paid remains unchanged once you cross this threshold.
In addition to the contributions mentioned earlier from the employer and employee, the Turkish government also contributes to the social security system. The state contributes up to a quarter of all premiums collected for long-term and general health insurance and 1% for unemployment insurance (equivalent to the employee’s contribution).
Furthermore, the Turkish state subsidizes 5% of the employer’s share of long-term social security premiums for private sector firms who pay their employees’ social security premiums on time and have no outstanding debts to the social security institution. The entire social security premium burden falls from 37.5 percent to 32.5 percent in this situation.
Social security contributions are made every month and are tax-deductible.
Social Security Requirements for Foreign Persons
The local employer must register a foreigner who does not have social security coverage elsewhere in the Turkish social security system.
Foreigners who are covered by social security in another nation, on the other hand, are free from paying social security contributions in Turkey if they meet the following criteria:
a) A reciprocal agreement was made between Turkey and their native country, or
b) Their country of origin is a member of the European Social Convention.
In Turkey, you must present proof of social security coverage to the local social security office.
(2) An employee working in one of the signature nations is subject to the social security scheme of the origin country when temporarily assigned to another signatory country, according to the European Convention on Social Security (for a maximum duration of 12 months). If the assignment time exceeds 12 months, the foreign employee will be covered by the host country’s social security scheme unless the host country’s social security organization agrees otherwise.
(3) Maximum duration for temporary assignments and extended periods are also specified in bilateral agreements between Turkey and other countries. For example, the social security agreement between Germany and Turkey (enacted on November 1, 1965) states that a temporary assignment can last up to 5 years and be extended for another three years. The person will be covered by the social security system of the origin country throughout the temporary assignment and the extended period.
Even if the foreign person assigned to Turkey is covered by social security in a country that is neither a signatory to the European Convention on Social Security nor has a bilateral social security agreement with Turkey.
The exemption for three months is granted if certain documents are submitted to Turkey’s local social security institution.
As a conclusion, since the young population work force rate against seniors and the new regulations after the mid-2000 s, Business Turkey provides a safe future.
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