SOCIAL SECURITY SYSTEM IN TURKEY. EU and Foreign Relations Department CONTENTS Institutional Framework Social Security Schemes Statistical Data about.

SOCIAL SECURITY SYSTEMIN TURKEY

EU and Foreign Relations Department

CONTENTS

Institutional Framework

Social Security Schemes

Statistical Data about the Turkish Social Security System

INSTITUTIONAL FRAMEWORK

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Institutional Framework

Summary of the old structure

Legal basis

Organizational structure

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Summary of the Institutional Structure of the Old System (1- Actors)

Social Insurance Institution (SSK) – Workers employed under a service contract

Bağ-Kur – Self-employed

Retirement Fund (Emekli Sandigi) - Civil Servants

Ministry of Finance and Ministry of Health

Public Bodies (healthcare for civil servants)

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Summary of the Institutional Structure of the Old System (2)

SSK Bağ-Kur Retirement Fund MoF and MoH Public Bodies

Old Age Old Age Old Age

Invalidity Invalidity Invalidity

Survivorship Survivorship Survivorship

Occ. DiseaseWork Accident

The agricultural employed are not covered

Maternity Maternity –no cash benefit (through health care system)

Maternity (no contribution is made by the insured – health care costs)

Maternity for civil servants

(no contribution ismade by the insured)

Health Care Health Care Health Care for pensioners

Non-Contributory Payment

Health Care for civil servants

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Legal Basis (1)• The Constitution of the Republic of Turkey

Article No 60: Everyone has the right to social security.The state shall take the necessary measures and establish the organization for the provision of social security.

• Social Security Institution Law No: 5502

• Social Insurance and Universal Health Insurance Law No: 5510

• Contributory System:• Social Insurance and Universal Health Insurance Law No:5510 (as of 1st October

2008)

• Law on Unemployment Insurance No. 4447.

• Obsolete Laws of which articles are still in effect• Social Insurance Law No:506 and Social Insurance Law For Agricultural Employees No. 2925

• Social Insurance Law No: 1479 for the Craftsmen and Artisans and Other Self Employers

• Law on Retirement Fund No. 5434 (for civil servants)

• Non Contributory System:• Law on payment of pension to the old aged persons (65 years old and over) who

are destitute No. 2022

• Law on Social Assistance and Solidarity Fund No. 3294

• General Directorate for Social Services and Child Protection Law No. 2828

• Law on issuance of Green Cards for the citizens who are incapable to pay for Health Care Services No. 3816

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Legal Basis (2)

ORGANIZATIONAL CHART OF THE SOCIAL SECURITY INSTITUTION

SOCIAL SECURITY SCHEMES

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Social Security Schemes

Old Age, Invalidity, Survivorship, Work Accident and occupational diseases, Health Care, Unemployment (Executed by Iskur), Non-contributory payments

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Premium Rates

INSURANCE BRANCHES Employed Employer TOTAL Government

Invalidity, old age, survivorship

9% 11% 20%Gov.

Contribution in the amount of

1/4* Total contributions

actually collected annually.

Short Term Insurance Branches(employment injuries, occupational diseases, sickness, maternity)

- 1% -6,5 % 1% -6,5%

Universal Health Insurance 5% 7,50% 12,50%

Unemployment 1% 2% 3% 1%

TOTAL 14% %19,5 - %25 33,5% - 39%

Old AgeScope Employed, self employed, civil servants

Conditions Age : 65 (gradually increasing from 58 for woman and 60 for man as of 2036)

Contribution period : contributory period of 9000 days for civil servants and self employed; 7200 days for workers

Benefits Old age pension, lump sum payment

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Special conditions for entitlement to old age pension (I)- Workers who had already lost 60% of their working capacity before they

started working (who were invalid at the date they began working) are entitled to receive old age pension if they have completed

- 15 years of insured work and payed invalidity, old age and survivors insurance premiums for 3960 days.

- 50 % to 59 % of their working capacity before they started working (who were invalid at the date they began working) are entitled to receive old age pension if they have completed 16 years of insured work and payed invalidity, old age and survivors insurance premiums for 4320 days.

    - 40% to 49% of their working capacity before they started working (who were invalid at the date they began working) are entitled to receive old age pension if they have completed 18

years of insured work and payed invalidity, old age and survivors insurance premiums for 4680 days.

Special conditions for entitlement to old age pension (II)

- The age limit for mine workers, working regularly or alternately in mines registered by the Ministry for minimum 20 years, is 55 years of age. Mine workers must complete minimum 7200 premium days.

- Those who have completed 55 years of age and are medically determined to be permaturely aged are entitled to receive old age pension in case they fulfill the other requirements.

- Total working periods of female workers who have a disabled child are increased by 0,25. Also, this period is deducted from the age limit.

Pension allocation formula

Pension = Average monthly earning x replacement rate- Past annual earnings on which premiums are based are updated using the update coeffiecient pertaining to each year, until the present value of all past earnings at the time of the pension claim is found. -(Updated past earnings + the current earnings ) / total number of premium days = average daily earning- Average daily earnings x 30= Average mothly earnings

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Replacement rates

The replacement rate is 2% for every 360 days covered by old age, invalidity and survivors insurance. Periods less than 360 days are taken into account proportionally.

The old age, invalidity or survivors pension allocated according to this formula cannot be less than 35% of minimum wage pertaining to the January of the the year of death or pension claim. (40%, if the insured has a spouse or a child under his responsibility)

Pensions are increased by the rate of inflation in the past 6 months

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InvalidityScope Employed, self employed, civil servants

Conditions minimum 60% loss of working capacity or earning capacity after entry into the insurance system.

Contribution period: Minimum 10 years of insured employment and 1800 premimum days.

10 years of insured employment is not sought for those who need constant care by others.

For the self employed, no premium debts including UHI premiums

* Reduction is made for the disabled persons which are not entitled to Invalidity Pension

Benefits Invalidity pension

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Duty Invalidity (Civil servants only) Civil servants who become invalid during the course of

their duty, or as a result of their actions which aim to protect thier instiution, or on a vehicle provided by their institution for travelling to or from the workplace, or due to an accident occuring at the workplace are deemed as invalid due to duty.

Duty invalidity pension is calculated on the basis of 30 years of service, irrespective of the real period, and increased on the basis of the degree of the invalidity.

Degree of invalidity                                          Increase rate

                1                                                               % 30                 2                                                               % 23                 3                                                               % 15                 4                                                               % 7                 5                                                               % 3                 6                                                               % 2

Replacement rates

For workers with upto 7200 premium days; 40%

For self employed with upto 9000 premimum days 50%

10% increase, in case the insured person in need of constant care by others

For both workers and self employed, 2 points increase for every extra 360 days over 7200 and 9000 respectively. Extra eriods shorter than 360 days will be calculated proportionally.

Replacement rate cannot exceed 90%.

SurvivorshipPersonal Scope Widow/ers, children and parents of the employed, self

employed, civil servants

ConditionsContribution period: 1800 days of contribution for workers, civil servants and self employed. Survivors of workers can apply for pension if the deceased had been insured for 5 years and had 900 days of premium payment excepting the service debt periods.

Benefits Old age pension, lump sum payment, marriage payment and funeral payment.

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Health CarePersonal Scope Turkish citizens residing in Turkey,

Persons employed in Turkey and transferred to abroad for business and their dependants,

Refugees and stateless persons,

Foreigners residing in Turkey and not covered by insurance according to the Legislation of another country

Conditions Contribution: Minimum 30 contributory period of days the scheme in preceding year and not having contribution related dept to the Institution in preceding 60 days

Exemptions From Conditions: Children under 18Delivery of urgent health servicesTreatment of communicable diseasesWork Accidents and occupational diseasesProtective health services to prevent addiction to harmful substances (such as smoking etc.)MaternityThe persons in the need of medical care from another personIn case of disaster, war and lock – out

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PAYG system

Large deficits

- arrears

- informality low active/passive

ratio in spite of favourable

demography- early pension age

STATISTICAL DATA FOR TURKISH SOCIAL SECURITY SYSTEM

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Statistical Data for Turkish Social Security System

1. Population Covered by Social Security Schemes

2. Financial Structure

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Population Covered by SSIPOPULATION COVERED BY

SSI'S (December 2008)(Thousand People)

SSK(employed)

BAĞ-KUR(self employed)

EMEKLİ SANDIĞI

(civil servants)

TOTAL

1-ACTIVES 9.767.017 3.260.719 2.464.20615.491.942

2-PASSIVES 4.625.719 1.795.063 1.605.5898.026.371

3-DEPENDENTS 18.259.259 9.377.960 5.263.14532.900.364

TOTAL32.651.995 14.433.742 9.332.940 56.418.677

Active/Passive Ratio(calculated by number of files) 2,11 1,82 1,53 1,93

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Financial Structure

SSI BUDGET (Million €)

2008 2009 BUDGET 2010 BUDGET 2011 BUDGET

Revenues 29.629 37.161 42.098 45.622

Premium Revenues 24.029 26.236 29.828 32.360

Other 5.600 10.925 12.270 13.262Expenditures 41.039 46.578 52.255 57.880

Pension Payments 26.052 30.367 34.293 38.133

Health Expenditures 11.166 12.142 13.564 15.044

Other 3.822 4.070 4.397 4.702

Deficit -11.411 -9.418 -10.157 -12.257

Budget Transfers 15.426 20.568 22.939 26.2341 € = 2.27 TL

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Thanks for your attention

For further information

www.sgk.gov.tr

Department of EU and Foreign Relations