The old-age pension system in Turkey is a multi-tiered system that includes both social security and private pension options.
The social security system, as governed by the Social Security Institution (SSI), is mandatory for all workers and covers approximately 85% of the population as workers, pensioners or dependents. Employees contribute to the system through payroll deductions, and employers also make contributions on behalf of their employees.
The SSI provides a basic pension to eligible retirees, with the amount determined by the individual’s contributions and length of service. Additionally, the SSI provides disability and survivor’s benefits for the insured within the scope. The Turkish Social Insurance Regime provides wide range of benefits to those who are within the scope.
In addition to the SSI, Turkey also has a voluntary private pension system. The private pension system was established in 2001 as a way to supplement the social security system and encourage citizens to save for their retirement. In essence, Turkish private pension system is a public supported saving model rather than being a complete pension plan system. The private pension system is based on a defined contribution model, where individuals make contributions to a pension fund and the accumulated savings are used to provide a pension or a lump-sum payment upon retirement. The private pension system is open to all citizens, but participation is relatively low, with only about 10% of the population enrolled. The government makes a 30 percent contribution to saving of individuals to the private pension system up to the amount of 12 times of the national monthly gross minimum wage.
The Turkish old-age pension system faces several challenges, including a rapidly aging population and a lack of funding to support the increasing number of retirees. As of January 2023 the SSI has 13.5 million retirees nationwide.
The government has implemented a number of reforms during the last three decades to address these challenges, including raising the retirement age and increasing contributions to the social security system. However, more comprehensive reforms may be needed in the future to ensure the long-term sustainability of the pension system.
Recently a new pension reform is being planned, which is contrary to these steps, to abolish the age requirement for getting retired for the insured who have entered the system prior the date of 9th of September, 1999. As a result of this populist new policy, 4 million new retirees are expected to added to the existing retirees within a couple of years.
Overall, the old-age pension system in Turkey includes both social security and private pension options, but faces challenges due to an aging population and lack of funding. The government has implemented some reforms to address these challenges, but more comprehensive changes may be needed in the future to ensure the long-term sustainability of the system. However, the Turkish social security system ensures a wide range of diverse benefits to insured who are within the scope, including the right for an old-age pension.
