Pension market alert: Turkey amends social security rules for early retirement
The Republic of Turkey’s government has amended its social security provisions, making it easier to retire early.
What does this change mean for pension schemes?
The reform allows for easier access to early retirement under social security rules for employees who started work before 8 September 1999. This impacts company plans because early retirement under social security rules often also triggers an entitlement to early retirement in said plans.
The impact of this reform will depend heavily on your specific demographic profile – for older groups there could be significant portion of employees who become eligible for early retirement. Women require at least 20 years’ insurance coverage and between 5,000 and 7,200 premium days, and men require at least 25 years’ insurance coverage and between 6,000 and 9,000 premium days to qualify for early retirement. This will mean that some employees will become eligible for early retirement from their mid-40’s.
Employees taking early retirement will generally become eligible for the termination indemnity. Given many employers may need to rehire some of these employees to retain the skills and size of their workforce, this could result in additional costs.
Companies may wish to look at the potential impact of these changes on their own workforce in the Republic of Türkiye, and the pension accounting figures (if material).