Good news for those with debts to SGK! A new regulation is expected that could cancel up to 90% of certain debts. Many self-employed (Bağ-Kur) contributors who earned the right to retire cannot finalize retirement because of unpaid SGK debts. Those who could not pay their contribution debts on time had their retirement rights suspended.
Previously, a regulation allowed Bağ-Kur contributors with SGK debts to revive their insurance periods by paying a reduced portion of their debts; in that arrangement 60% of the debt was written off and corresponding service periods were reactivated. Under the law expected to be adjusted in 2020, there is again discussion of writing off up to 90% of the debt difference caused by inflation.
Bağ-Kur contributions must be paid monthly. However, many people cannot make regular, timely payments and outstanding debts accumulate. A 2015 regulation froze debts and removed liabilities for contributors with 12 months or more of unpaid premiums. It is estimated that roughly one million Bağ-Kur contributors have frozen premiums or outstanding Bağ-Kur debts. Within the SGK system, contributors who paid premiums from outside and later qualified for retirement benefited from an “ihya” (revival) mechanism. The ihya system lets someone who previously received a lump-sum payment restore their retirement entitlement by paying past debts once their financial situation improves, effectively reactivating their insured period.
İhya System and Retirement Opportunity
The ihya system allows frozen periods to be paid by the insured or their beneficiaries, a process often called revival. Periods are not lost: if an ihya request is made and the debts for those periods are paid, the service time is counted. Through ihya, the number of premium days increases; if a person fills any missing premium days and meets the age requirement, they can retire immediately.
When performing an ihya transaction, SGK calculates the owed premiums using the current value. For example, if a tradesperson has a debt dating back to 2005, the calculation uses today’s monthly premium amount. Under current calculations, the amount to revive a period often starts at least around 700 TL. If a tradesperson paid nothing since 2005, the principal debt alone can reach about 109,000 TL. With interest and penalties, the debt grows substantially.
Up to 90% of Debt May Be Written Off
The possibility of writing off 90% of the debt has been proposed as part of an amnesty package. According to the draft submitted to the parliament, frozen premiums would be recalculated not at today’s rates but according to the year when the debt originated. In other words, the periods would be treated as if they had never been frozen. During implementation, accrued interest on the debt would be eliminated and only the inflation difference would be applied. If the debtor pays in cash up front, 90% of the applicable amount could be written off.
This new arrangement would offer significant relief to Bağ-Kur contributors with past-due liabilities. For example, the lowest Bağ-Kur premium in 2010 was 47 TL. When that debt is recalculated according to 18 years of inflation, it would amount to about 376 TL. If paid in a single upfront payment, 90% of the inflation difference—roughly 296 TL—would be forgiven, leaving a payable premium of about 80 TL. Without such an amnesty, the monthly payment might otherwise be at least 700 TL per month under current calculations.
Those wishing to pay Bağ-Kur premium debts will be able to apply through the end of July. The deadline for the first installment and for lump-sum payment is set as August 31. According to the amnesty package, the debt determined after an ihya request must be paid in full by August 31 for the benefits to apply. Failure to meet that payment deadline will result in loss of the offered advantage.