Latest update: Legislation eliminating the minimum age requirement for retirement in Turkey entered into force upon its publication in the Official Gazette on 3 March 2023.
Background
On 8 September 1999, the Turkish government passed amendments to the social insurance law:
- establishinga minimum retirement age requirement (age 58 for women and age 60 for men) and,
- increasing the minimum number of days an employee is mandated to pay premiums to qualify for retirement from 5,000 days to 7,000 days – for a minimum of 20 years of insured service for women and 25 years for men.
That legislation was widely criticized as it prevented many employees from retiring, who have met all the eligibility conditions for retirement except for the minimum age requirement, from retiring.
Key details
The new legislation allows the following workers to retire at any age and receive social security retirement benefits:
- Workers insured under the Social Insurance Institution (“SSI”) who started working on or before 8 September 1999, with (i) a minimum period of paid premiums ranging from 5,000-5,975 days according to the employment start date, and (ii) a minimum of 20 years of insured services for women and 25 years for men.
- Workers insured under the SSI who started working on or after 9 September 1999, with insurance backdated prior to 8 September 1999 as allowed by applicable laws.
The legislation exclusively gives employees the right to terminate employment due to retirement age. An employer who terminates an employment contract due to retirement age against the will of an employee commits unlawful termination.
To apply for retirement, an employee must obtain an eligibility letter from the SSI and submit it to the employer along with a letter of resignation due to retirement. The employer must notify the SSI within a period of ten days from the date of retirement.
Eligible retirees will be entitled to the existing mandatory employer-paid severance. The lump-sum payout is equal to one month’s pay, per year of service, subject to a salary cap of TRY 19,213 per month as of 1 January 2023. The employer must pay the full severance to the employee by the retirement date unless they mutually agree on an installment plan.
Retirees may choose to continue working after their retirement and may be rehired by their former employer. However, employers are not obliged to re-employ retired employees. In the case where the employer and the employee mutually agree on re-employment within thirty (30) days from the date of retirement, five percentage points of the employer’s social security support premium will be covered by the Treasury.
The Turkish government announced its plans to introduce financial mitigation measures for employers during the drafting phase of the law, however, no regulation has been issued at this point. It is expected that such regulation will be published in the near future.
Next steps
The relaxed eligibility requirements may lead to an increase of retirements in the coming weeks and months. Employers should monitor the implementation timeframe of the upcoming legislation and plan for the financial impact that may result from mandatory severance payouts to eligible employees.