New Era Begins In Social Security System 

By Isa Yazar, Today’s Zaman

September 30, 2008

Turkey

A social security reform package that has been on the government's agenda for the last five years will finally take effect on Wednesday. The reform package will affect almost everyone and focuses on two areas: It provides for general health insurance that covers the entire population and a set of provisions introducing stricter conditions and requirements for retirement. 

Although the retirement provisions will become more effective and influential in the long term, provisions on healthcare will affect everyone starting Wednesday. The total amount of resources the state will reserve for health services will subsequently increase significantly. 

In the new system, the state will pay the health premiums of those with an income of less than one-third the minimum wage. Those with an income equal to the minimum wage will receive healthcare services after paying a premium of YTL 24. Individuals earning between minimum wage and twice the minimum wage will pay YTL 73 for these entitlements while those earning more than twice the minimum wage will be required to pay YTL 146. 

Social Insurance for the Self-Employed (BAĞ-KUR) will extensively benefit from the social security reform. Previously, to be covered by BAĞ-KUR, workers had to pay insurance premiums for 240 workdays. Premiums for social security are paid once every month, with the amount determined in accordance with the number of days the payee worked that month. Under the new law, the number of days has been reduced to 30 days. If a worker is unable to work due to sickness, s/he will receive a payment. Women with BAĞ-KUR coverage will be entitled to eight weeks of paid leave before and after birth. Those insured by BAĞ-KUR who are denied healthcare service due to unpaid premiums will remain entitled to receive health services if they have a premium debt for up to 60 days. Additionally, BAĞ-KUR beneficiaries will choose their premium amount within a range to be determined by the agency. 

Artisans and small business owners currently pay a premium equal to 40 percent of their monthly income; this will be reduced to 33.5 percent. BAĞ-KUR beneficiaries will start receiving payments to cover funeral, breastfeeding and marriage expenses. The reforms expect to eliminate the abuse of benefits offered by the system to ensure the sustainability of the program in the future. 

The reform reduces the total amount of the premium payment for those who are employed for the first time to receive health services from a 90-day payment to one month. Likewise, the insured’s dependants will be entitled to receive health services without waiting for four months after the initial employment. Those insured by BAĞ-KUR who become unemployed will be entitled to receive health services for three months instead of four during their period of unemployment. 

Starting Oct. 1 private hospitals will not be able to charge a fee in addition to charging a price difference greater than 30 percent of state-owned hospital fees. Hospitals owned and run by foundations and charity organizations will also be entitled to charge more than state-owned hospitals. Patients will have to pay a fee of YTL 2 for outpatient examinations. Hospitalized patients will not be required to make this payment. Under the new bill, the travel expenses of individuals who are referred to a hospital outside of their city of residence will be covered. The reform introduces stricter requirements for being entitled to retirement benefits and reduces the payout amount of retirement pensions. While calculating the pension, the amount of premiums paid over the entire period of employment will be taken into account. These provisions already entered into force as of May 1. Currently, 2.6 percent of the monthly salary of a person multiplied by the number of months s/he worked is used to determine the retirement pension. In the new system, this rate will be reduced to 2 percent for those who have gotten insurance coverage for the first time since April 30 of this year. 

The relevant provision of the bill, which envisaged raising the age of retirement gradually to 65, entered into force on May 1, 2008. The age of retirement will gradually be increased to 65 by 2048. Women will become entitled to retire at the age of 58 and men at the age of 60 until 2036. Social Security Authority (SSK) beneficiaries will have to pay premiums for 7,200 days whereas those who are covered by the Pension Fund (Emekli Sandığı) and BAĞ-KUR will continue paying premiums for 9,000 days. 

Paying the premiums for 1,800 days instead of 3,600 will be sufficient for relatives of Emekli Sandığı beneficiaries to receive a death pension. However, SSK beneficiaries will have to meet stricter requirements under the new bill to be entitled to this type of pension. The bill introduces no changes for BAĞ-KUR beneficiaries on this matter. 

Payment of premiums for 1,800 days and insurance coverage for at least 10 years will be sought before pension is to be granted to a handicapped individual. However, beneficiaries who need extensive care by others will be exempt from the latter requirement. In the new system, beneficiaries of the death pension will have to choose between receiving a payment after either their spouse or parents die. Additionally, extra entitlements for members of some professions, including journalists, pilots and artists, will no longer be applicable and claimable. Conversely, the reform introduces a new arrangement under which workers at lead, arsenic, glass, cement, aluminum and cast iron factories will receive 60 days free every year; in other words, working for six years will count as having worked for seven years. This means that workers in these industries will retire three years earlier than employees in other professions. Business enterprises employing more than 50 workers will have to deposit workers’ salaries into the workers’ bank accounts starting in 2009. Enterprises with more than 30 employees will have to do the same after 2010 and those with more than 10 after 2011. 

After October, those who buy insurance coverage on their own initiative will be included in the BAĞ-KUR coverage. Unlike the former system, all will be entitled to buy insurance on their on initiative under the reformed system. 

Pros of social security reform 

All under age 18 will have social security coverage. 

Those with an income of less than one-third of minimum wage will be entitled to free health care services. 

People with BAĞ-KUR coverage will receive payments to cover the cost of breastfeeding, marriage and sickness. 

People with BAĞ-KUR and SSK coverage will receive health care services upon the payment of a 30-day premium. 

Women with BAĞ-KUR coverage will be entitled to an eight-week leave of absence before and after birth. 

Individuals with BAĞ-KUR coverage will be entitled to receive health care services even if they fail to pay premiums for up to 60 days. 

Village headmen (mukhtars) are automatically covered by the insurance scheme exclusive to agricultural workers. 

Relatives of martyrs and veterans will receive free treatment at private hospitals. 

Those referred to a hospital outside of their city of residence will be reimbursed for their travel expenses. 

A mother with a child who needs special care is entitled to retiring five years earlier than she would otherwise. 

Cons of social security reform 

The ratio of those insured people with a regular retirement payment will be reduced from 3 to 2 percent. 

A distinction will be made between senior and junior civil servants. 

Extra entitlements for journalists and pilots will no longer be available. 

The Social Security Institution (SGK) will determine the payout for breastfeeding and funeral costs. 

The age of retirement, currently 60 for men and 58 for women, will gradually rise to 65 after 2036; 

To be entitled to retirement benefits and a pension, those insured by SSK will have to pay premiums for 7,200 days. BAĞ-KUR and Emekli Sandığı insured will need to pay premiums for 9,000 days. 

Those insured after Oct. 1 will receive a reduced salary if they work while retired.

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