Because living conditions are difficult for retirees in Turkey, many must work other jobs in addition to receiving their pension to make ends meet. Of approximately 10 million retirees in Turkey, about 4 million are still working. Until recently, retirees who earned extra income from another job had 10% deducted from their pension as a “social security support contribution.” This deduction has been removed by a recently approved omnibus law in Parliament. As a result, eligible working retirees will now receive their pensions without that deduction. In this article, we discuss the rules about deductions for working retirees.
The most important point to note is that this change does not apply to everyone. The removal of the deduction applies only to those who are classified as 4b retirees. The deduction still applies to 4a retirees.
If you run your own business, your pension will not be reduced. However, if you work for an employer, 10% of your pension will be deducted, which falls under the scope of deductions from employed retirees.
Who Is Covered?
The rules on deductions for working retirees are specific. Effective 29 February 2016, the law favored retirees under the 4b category. From that date, retirees who wanted to run their own small businesses, open a neighborhood shop, work as self-employed individuals, or serve as partners in a company no longer had deductions taken from their pensions. However, this change does not apply to those working under 4a; deductions for them remain in effect and the rules may differ.
No matter under which scheme you originally retired, what matters is the employment status you assume after retirement. Deductions for working retirees depend on that status. If you retired from the scheme formerly known as Bağ-Kur and you now work under 4a (formerly SSK) as an employee, the deduction will continue.
Conversely, if you retired under 4a and now work as a 4b self-employed person, deductions from your pension will cease.
Deductions for 4a Employees
Looking at deductions for those in the 4a category: individuals who continue to work as employees subject to 4a will continue to pay the social security support contribution. There is no change for retirees who work as employees under the former SSK; they will not see an increase in their pension because the deduction still applies. When deductions for 4b workers were removed, some 4a retirees felt disadvantaged because their own pensions did not increase. The main source of confusion is that the legal change applies only to those who run their own business after retirement.
Rate of the Deduction
Under the name social security support contribution, the deduction from a working retiree’s pension was 15% until July 2015. From July 2015 it was reduced to 10%. For example, a retiree with a 1,000 TL pension previously saw 150 TL deducted; after the reduction it became 100 TL. For retirees who are fully exempted from this contribution, the net pension will return to 1,000 TL, effectively representing a 10% increase compared to the 10% deduction scenario. This is how the deduction rate for working retirees has evolved.
Debts Remain
The social security support contribution was abolished as of 29 February. However, any contribution debts assessed before that date must still be paid. Debts were not erased. The only change affecting working retirees was the removal of the social security support contribution for those who run their own business.
Stopping Your Pension and Working
Under Law No. 5510, those who continue to work after retirement and are classified as “not insured” do not have compulsory social insurance coverage and therefore are not required to pay contributions; however, they are also not covered against the risks that social insurance protects against. If they prefer, retirees can suspend their pension and continue working under 4b. This is how these situations are defined within the scope of deductions for working retirees.
Refunds for Pension Fund Members
Pension fund members who receive their pension quarterly and had social security support contribution amounts deducted will receive refunds without the need for a request or application. Provincial SGK directorates will transfer the deducted amounts back to the relevant accounts. This is how the handling of deductions for working retirees has been established.
Retirees who cannot afford to start their own business will still see deductions if they work under 4a. No change has been made for those who must work as employees due to financial constraints. Support was directed to retirees who can establish their own businesses. In practice, a retiree working as an employee may receive less net pension than a retiree who runs a business. For more detailed information on deductions for working retirees, you can consult the relevant authorities.