Increases to pension payments affect many retirees. Over the past five years, the erosion of purchasing power in these pensions has been striking—like a candle melting or finding water in the desert. We have compiled the last 20 years of pension developments and the impact of inflation for you, using several charts. The recent announcement that the minimum pension would be 7,500 TL disappointed many, since the increase was not applied uniformly to all retirees. Continue reading to see the pension increases, view the charts, and learn the details.
Debate Continues Over Pension Levels
After President Erdoğan announced that the minimum pension would be 7,500 TL, public discussion resumed about whether pensions are adequate. Calls persist for pensions to at least match the minimum wage, while observers note that many pensions remain below the poverty and hunger thresholds published by Turkish labor organizations.
This first chart shows that between 2001 and 2015 pensions were generally above the minimum wage. After that 14-year period, pensions were aligned with the minimum wage from 2016 to 2018, and since 2019 many retirees have received pensions below the minimum wage.
Viewed proportionally, the lowest pension in 2001 was roughly 1.5 times the minimum wage. In the first two months of 2023 the lowest pension stood at 5,500 TL, reducing that ratio to approximately 0.65. If the minimum wage had not been raised, the ratio would have been about 0.9.
The next chart tracks the minimum wage in dollar terms. After peaking near $473 in 2012, there was a decline. Looking toward 2023, any significant rise in the exchange rate will likely push the dollar value of the minimum wage down further.
A chart measuring retirees’ ability to cover rent shows that from 2003 to 2020 pensions were generally sufficient to pay rent. Starting in 2021, rising rents outpaced pensions. By 2022, one pension covered only about half of typical rent costs.
The chart that tracks retirees’ ability to buy meat shows a clear decline beginning in 2021, reflecting reduced food purchasing power as prices rose faster than pension increases.
Finally, the chart showing how many months it takes a retiree to afford a car indicates that in 2014 a pensioner could buy a vehicle in as few as 45 months. Without changes to pension levels, a pension of 5,500 TL would extend that period to about 181 months, while a 7,500 TL pension would shorten it to approximately 133 months.