Recently, the topic of Social Security restructuring has attracted attention, especially among people with multiple debts. The planned restructuring covers specific types of liabilities, so those who want to benefit should pay attention to the details and eligibility requirements.
Who Can Benefit from the Restructuring?
The social security restructuring discussed in parliament was added as a clause to a bill on employment incentives. If enacted, it will allow a wide range of debts — from tax liabilities to social security premium debts — to be restructured so they can be repaid more easily. Parliament continues to review the final details of the bill, and it is expected to be passed soon. Many people, however, are wondering which debts will be included and who will be eligible. In short, the restructuring aims to cover broad groups, from self-employed Bağkur contributors to wage earners.
When the law is enacted, all social security premiums, pension contribution deductions, unemployment insurance premium debts, social security support premium debts, voluntarily paid premiums by those who want to retire, Bağkur contributors’ suspended coverage period premiums, and general health insurance premiums will be included in the restructuring. Late-payment penalties and interest on these premiums will also be restructured. In other words, virtually all debts owed to the Social Security Institution will be eligible, including premium arrears. It is estimated that approximately 1.2 million people may benefit from the restructuring.
How Will Debt Restructuring Work?
There is strong interest in how SGK debt restructuring will be implemented. The crucial cutoff date is August 31, 2020: all debts incurred up to that date will be eligible for restructuring; debts created after that date will not be included. Those wishing to restructure must apply by the end of the year once the law is passed. Applicants will face two main options: a one-time lump-sum payment or installment payments.
If the outstanding balance is paid in full as a lump sum by February 2021, the principal must be paid and will benefit from large discounts — up to a 90% reduction or removal of delay interest and penalties. If paid in full by April 2021, 50% of the delay interest and penalties will be eliminated. For those who choose installment plans, available options are 6, 9, 12, or 18 installments. Installments will be payable every two months rather than monthly. Thus, selecting the 12-installment option effectively spreads payments across 24 months because payments are made once every two months; the 18-installment option will spread payments over 36 months. However, choosing longer installment plans will add an inflation adjustment to the principal. Prospective applicants should therefore consider the total extra cost when choosing long-term installments.
Includes Bağkur (4B) Contributors
Accumulated premium debts create significant problems for Bağkur contributors (4B). Many could not pay premiums, particularly during the COVID-19 pandemic. This restructuring offers a major advantage to Bağkur contributors, but they must follow the announced conditions closely. If the bill becomes law, Bağkur contributors with outstanding debts will have two months to pay or restructure them. Failure to pay or arrange restructuring will result in suspension of insurance coverage, and the indebted periods will not be counted as insured time. Coverage would resume from November 1, 2020, but such interruptions can substantially affect the length of service required for retirement.