In recent years, bills submitted to the Parliament have included proposals to bring insurance premium debts under a new restructuring framework. Accordingly, a target of TRY 23,000 for premium restructuring has been set. Late-payment penalties and interest on insurance premium debts can be erased, and installment plans can be offered. This change would therefore provide significant relief in addition to arranging outstanding premium obligations.
Which Debts Will Be Covered by the Bağ-Kur Restructuring?
The premium restructurings discussed in Parliament are intended to cover almost all types of insurance premiums. Premiums due under 4/a, 4/b and 4/c schemes for periods before March 2017 will be reopened for restructuring. As a result, employers who owe premiums to the Social Security Institution may become eligible for incentives. The incentive already in force for insurance premiums means that some employers with outstanding premium debts could benefit from relief.
Under the debt restructuring scope, employers who restructure and begin paying their debts may receive incentive benefits. Within the Bağ-Kur framework, those responsible for paying their own premiums—categorized as 4/b, previously called Bağ-Kurlu—are included. Small shopkeepers often cover rent and other operating expenses from limited resources and may lack the means to pay social security premiums. Consequently, many self-employed Bağ-Kur members have accumulated premium debts and are included in the restructuring. Those who pay their restructured premiums will be able to qualify for retirement or access health services.
Bağ-Kur Payments, Limits and Dates
Individuals who previously worked under Bağ-Kur but did not pay their premiums will have an opportunity to regularize their pension eligibility. Voluntary insured persons may also be included in the restructuring if they choose. From October 1, 2008 onward, individuals can opt to be evaluated as Bağ-Kur members, depending on their preference.
Under this scope, unpaid premiums prior to March 2017 (for those who did not pay their own premiums) are included in the restructuring. Additionally, those with outstanding premiums stemming from unimplemented collective insurance arrangements and who therefore are not recorded by the Social Security Institution during these periods can also settle their debts through the restructuring. As of March 1, 2016, social security surcharge premiums that would have been required for some working retirees under Bağ-Kur have been removed.
Therefore, after that date, pensioners who open a small business do not face deductions from their retirement pay. For retirees who began receiving benefits before that date, exceptions exist: if they continued working under Bağ-Kur and were required to pay SGDP (social security surcharge) contributions, a debt may have accumulated in their name. Those still owing such debts can benefit from restructuring, which wipes out late-payment penalties and fines and provides installment payment options. Under the debt restructuring framework, employers may also be included for shortfalls in reported worker contributions. The resulting insurance premium, together with late-payment interest and fines for amounts above the calculated threshold, is covered by the restructuring.
For this reason, employers can benefit from the restructuring for worker-related amounts predating March 2017. Another important aspect for employers within the premium restructuring is administrative monetary penalties. Within this framework, actions taken up to the end of March 2017 that produced penalties and late-payment interest are included. Those who benefited from previous debt restructurings and continue under the current restructuring can also benefit for the period between July 1, 2016 and May 31, 2017.
Only those periods specified will be included in the new restructuring. The parliamentary bill under discussion foresees that, if enactment is delayed, the deadline may be extended to May 31, 2017. To be eligible for the debt restructuring, applications must be submitted by May 30, 2017.
Latest Decisions on Bağ-Kur
If Parliament extends the legislative timetable, the period for enactment may be prolonged accordingly. Nevertheless, once the bill is enacted, it is advisable to submit applications promptly. The document submission process should begin without delay. Within the restructuring scope, outstanding premium debts and the associated late-payment interest and fines will be fully waived.
For up-front payments, a discount equal to 50% of the update amount calculated over the Domestic Producer Price Index (YD-ÜFE) will be applied. Debts can be paid in installments for up to 36 months. From July 1, 2017, these measures will be implemented nationwide. Authorities also expect that concurrent road and traffic regulations will reduce accidents and severe outcomes by ensuring drivers observe speed limits appropriate to their vehicle class on highways.