Many business owners who registered themselves as employees in their own companies and were covered under the SGK (Social Security Institution) are now being redirected to Bağkur. As a result, a significant number of company owners will see reductions in their retirement pensions exceeding 2,000 Turkish Lira.
Disappointing News for Business Owners
Many business owners who applied for retirement recently encountered an unexpected SGK decision. Those who listed themselves as employees at their own workplaces under SGK are being reassigned to Bağkur. This reclassification can lead to pension decreases of more than 2,000 TL for many business owners.
Before October 2008, individuals who became partners in the company they worked for, founders or board members of a joint-stock company, general managers, or partners in a limited company could retire from SGK provided they paid contributions continuously during their Bağkur periods. However, SGK ended that practice with General Communiqué No. 62858.
Although plans to convert severance pay into a fund have been postponed, authorities have issued decisions affecting business owners rather than workers. Individuals who perform work in their own name and account, and those who continue working as company partners, are subject to Bağkur. Yet, because of the practical realities of running a company, it was not always clear which social security scheme applied to those who appeared as employees of their own companies.
To remove uncertainty, SGK used October 2008 as a cutoff. It allowed those who began working as SGK-insured employees after that date and then became company partners to continue under SGK, provided there was no interruption in premium payments. Under those conditions, people who otherwise would be Bağkur-insured could remain SGK-insured. However, if an interruption occurred in SGK coverage during a Bağkur period, SGK enforces mandatory reassignment to Bağkur.
Retroactive Retirement Rights Removed
The communiqué also emphasized that individuals who previously qualified for retirement from SGK can no longer claim that right under the new interpretation. Rights obtained in past periods were declared invalid under the new rule. Because this change affects many business owners, it can produce unpleasant surprises during retirement application processing.
Under current legislation, individuals who should retire from SSK (the older SGK framework) but were transferred into Bağkur because of interruptions in SSK contributions may experience an average pension drop of about 2,000 TL. Experts note that the provision in Law No. 5510, enacted in 2008, which states that owners or partners cannot be registered as SSK-insured (4/a) was not sufficiently communicated to many people. Legally, company owners should not be admitted to the system as SSK-insured in most cases.
Specialists also point out that when someone is initially registered under SSK and pays premiums, then later redirected to Bağkur, the paid SSK contributions effectively lose their value. If the person is removed from SSK, returning the difference in paid premiums or crediting those amounts as Bağkur days equivalent could remedy the hardship. Under the current system, though, those who started under SSK but ended up in Bağkur often lose the value of those paid premiums. Because SSK contributions are not accepted at the ceiling amount when transferred, this creates disadvantages both during the accumulation of retirement rights and in the monthly pension received after retirement.
To address this issue, experts recommend protecting the retirement rights of those who began as SSK-insured in their own companies prior to 2008. They also suggest recognizing SSK rights when a partner company participates as a legal entity in another company, so that those partnerships do not automatically eliminate previously acquired SSK coverage.