The reform package has been on Turkey’s agenda for the last five years. It passed in Parliament for the first time in 2006, but it could not be implemented because the Constitution Court rejected it. After the general elections of July 22, 2007, the package was submitted to a parliamentary commission with significant amendments. But before it could be discussed in Parliament, the Labor Platform, an organized initiative of 17 large trade unions, launched protests against the new draft. The government negotiated the bill with trade unions once again and made some additional changes.
With the reform package, five different institutions and their corresponding laws that regulate the social security system -- the Social Security Authority (SSK), the Pension Fund (Emekli Sandığı), Social Insurance for the Self-Employed (Bağ-Kur), the agricultural Bağ-Kur and the agricultural SSK -- will be combined under a single roof.
The new system stands on four basic pillars. The first is general health insurance, which brings every individual in Turkey into the health insurance system. The second pillar is the extension of the minimum number of workdays required to be eligible for retirement; the third is the raising of the retirement age; and the fourth is the reduction of pensions. These changes are aimed at reducing deficits in the social security system in the long run and increasing the funds allocated to health care.
With the general health insurance, every individual below the age of 18 will receive health insurance. In addition to children, dependants -- such as the unemployed wives of insured workers -- and pregnant women will receive free medical treatment. In cases of medical emergency, accidents at work and contagious disease, medical care will be provided for free, regardless of whether or not the patient has paid insurance premiums. The health insurance premiums of those who have incomes of less than one-third the minimum wage will be supplemented by the Treasury.
The method used for the calculation of pensions after retirement has also changed and with the new law people will receive lower pensions than they would have gotten in the old system. The pensions of people already in the social security system will be calculated according to the old method for half of their minimum work days and according to the new method for the other half. People will be able close the resulting gap in their pensions by working more. The new law will not affect people who are already retired.
The law also increases the minimum number of workdays required to be eligible for retirement to 7,200 for workers and 9,000 for civil servants and the self-employed. The retirement age will be increased gradually after 2036 until it reaches 65 after 2048. Until 2036, people who have completed their minimum number of workdays will be able to retire at the age of 58 for women and 60 for men.
In an attempt to combat the unregistered economy, the reform package includes a provision that requires employers to pay their employees through direct deposits into bank accounts. Banks will not be allowed to charge any fees on paycheck transactions.