1. SOCIAL SECURITY SYSTEM IN TURKEY

2. EU and Foreign Relations Department CONTENTS Institutional Framework Social Security Schemes Statistical Data about the Turkish Social Security System

3. INSTITUTIONAL FRAMEWORK EU and Foreign Relations Department

4. Institutional Framework Summary of the old structure Legal basis Organizational structure EU and Foreign Relations Department

5. Summary of the Institutional Structure of the Old System (1- Actors) Social Insurance Institution (SSK) – Workers employed under a service contract Bağ-Kur – Self-employed Retirement Fund (Emekli Sandigi) - Civil Servants Ministry of Finance and Ministry of Health Public Bodies (healthcare for civil servants) EU and Foreign Relations Department

6. Summary of the Institutional Structure of the Old System (2) SSKBağ-Kur Retirement Fund MoF and MoH Public Bodies Old Age Invalidity Survivorship Occ. Disease Work Accident The agricultural employed are not covered MaternityMaternity –no cash benefit (through health care system) Maternity ( no contribution is made by the insured – health care costs) Maternity for civil servants (no contribution is made by the insured) Health Care Health Care for pensioners Non- Contributory Payment Health Care for civil servants EU and Foreign Relations Department

7. Legal Basis (1) The Constitution of the Republic of Turkey Article No 60: Everyone has the right to social security. The state shall take the necessary measures and establish the organization for the provision of social security. Social Security Institution Law No: 5502 Social Insurance and Universal Health Insurance Law No: 5510

8. Contributory System: Social Insurance and Universal Health Insurance Law No:5510 (as of 1st October 2008) Law on Unemployment Insurance No. 4447. Obsolete Laws of which articles are still in effect Social Insurance Law No:506 and Social Insurance Law For Agricultural Employees No. 2925 Social Insurance Law No: 1479 for the Craftsmen and Artisans and Other Self Employers Law on Retirement Fund No. 5434 (for civil servants) Non Contributory System: Law on payment of pension to the old aged persons (65 years old and over) who are destitute No. 2022 Law on Social Assistance and Solidarity Fund No. 3294 General Directorate for Social Services and Child Protection Law No. 2828 Law on issuance of Green Cards for the citizens who are incapable to pay for Health Care Services No. 3816 EU and Foreign Relations Department Legal Basis (2)

9. ORGANIZATIONAL CHART OF THE SOCIAL SECURITY INSTITUTION

10. SOCIAL SECURITY SCHEMES EU and Foreign Relations Department

11. Social Security Schemes Old Age, Invalidity, Survivorship, Work Accident and occupational diseases, Health Care, Unemployment (Executed by Iskur), Non-contributory payments EU and Foreign Relations Department

12. Premium Rates INSURANCE BRANCHESEmployedEmployerTOTALGovernment Invalidity, old age, survivorship 9%11%20% Gov. Contribution in the amount of 1/4* Total contributions actually collected annually. Short Term Insurance Branches (employment injuries, occupational diseases, sickness, maternity) -1% -6,5 % Universal Health Insurance5%7,50%12,50% Unemployment1%2%3%1% TOTAL14% %19,5 - %2533,5% - 39%

13. Old Age ScopeEmployed, self employed, civil servants ConditionsAge : 65 (gradually increasing from 58 for woman and 60 for man as of 2036) Contribution period : contributory period of 9000 days for civil servants and self employed; 7200 days for workers BenefitsOld age pension, lump sum payment EU and Foreign Relations Department

14. Special conditions for entitlement to old age pension (I) -Workers who had already lost 60% of their working capacity before they started working (who were invalid at the date they began working) are entitled to receive old age pension if they have completed - 15 years of insured work and payed invalidity, old age and survivors insurance premiums for 3960 days. - 50 % to 59 % of their working capacity before they started working (who were invalid at the date they began working) are entitled to receive old age pension if they have completed 16 years of insured work and payed invalidity, old age and survivors insurance premiums for 4320 days. - 40% to 49% of their working capacity before they started working (who were invalid at the date they began working) are entitled to receive old age pension if they have completed 18 years of insured work and payed invalidity, old age and survivors insurance premiums for 4680 days.

15. Special conditions for entitlement to old age pension (II) - The age limit for mine workers, working regularly or alternately in mines registered by the Ministry for minimum 20 years, is 55 years of age. Mine workers must complete minimum 7200 premium days. - Those who have completed 55 years of age and are medically determined to be permaturely aged are entitled to receive old age pension in case they fulfill the other requirements. - Total working periods of female workers who have a disabled child are increased by 0,25. Also, this period is deducted from the age limit.

16. Pension allocation formula Pension = Average monthly earning x replacement rate - Past annual earnings on which premiums are based are updated using the update coeffiecient pertaining to each year, until the present value of all past earnings at the time of the pension claim is found. -(Updated past earnings + the current earnings ) / total number of premium days = average daily earning - Average daily earnings x 30= Average mothly earnings Department of EU and Foreign Relations

17. Replacement rates The replacement rate is 2% for every 360 days covered by old age, invalidity and survivors insurance. Periods less than 360 days are taken into account proportionally. The old age, invalidity or survivors pension allocated according to this formula cannot be less than 35% of minimum wage pertaining to the January of the the year of death or pension claim. (40%, if the insured has a spouse or a child under his responsibility) Pensions are increased by the rate of inflation in the past 6 months Department of EU and Foreign Relations

18. Invalidity ScopeEmployed, self employed, civil servants Conditions minimum 60% loss of working capacity or earning capacity after entry into the insurance system. Contribution period: Minimum 10 years of insured employment and 1800 premimum days. 10 years of insured employment is not sought for those who need constant care by others. For the self employed, no premium debts including UHI premiums * Reduction is made for the disabled persons which are not entitled to Invalidity Pension Benefits Invalidity pension EU and Foreign Relations Department

19. Duty Invalidity (Civil servants only) Civil servants who become invalid during the course of their duty, or as a result of their actions which aim to protect thier instiution, or on a vehicle provided by their institution for travelling to or from the workplace, or due to an accident occuring at the workplace are deemed as invalid due to duty. Duty invalidity pension is calculated on the basis of 30 years of service, irrespective of the real period, and increased on the basis of the degree of the invalidity. Degree of invalidity Increase rate 1 % 30 2 % 23 3 % 15 4 % 7 5 % 3 6 % 2

20. Replacement rates For workers with upto 7200 premium days; 40% For self employed with upto 9000 premimum days 50% 10% increase, in case the insured person in need of constant care by others For both workers and self employed, 2 points increase for every extra 360 days over 7200 and 9000 respectively. Extra eriods shorter than 360 days will be calculated proportionally. Replacement rate cannot exceed 90%.

21. Survivorship Personal ScopeWidow/ers, children and parents of the employed, self employed, civil servants Conditions Contribution period: 1800 days of contribution for workers, civil servants and self employed. Survivors of workers can apply for pension if the deceased had been insured for 5 years and had 900 days of premium payment excepting the service debt periods. BenefitsOld age pension, lump sum payment, marriage payment and funeral payment. EU and Foreign Relations Department

22. Health Care Personal Scope Turkish citizens residing in Turkey, Persons employed in Turkey and transferred to abroad for business and their dependants, Refugees and stateless persons, Foreigners residing in Turkey and not covered by insurance according to the Legislation of another country Conditions Contribution: Minimum 30 contributory period of days the scheme in preceding year and not having contribution related dept to the Institution in preceding 60 days Exemptions From Conditions: Children under 18 Delivery of urgent health services Treatment of communicable diseases Work Accidents and occupational diseases Protective health services to prevent addiction to harmful substances (such as smoking etc.) Maternity The persons in the need of medical care from another person In case of disaster, war and lock – out EU and Foreign Relations Department

23. PAYG system Large deficits - arrears -informality low active/passive ratio in spite of favourable demography - early pension age

24. STATISTICAL DATA FOR TURKISH SOCIAL SECURITY SYSTEM EU and Foreign Relations Department

25. Statistical Data for Turkish Social Security System 1.Population Covered by Social Security Schemes 2.Financial Structure EU and Foreign Relations Department

26. Population Covered by SSI POPULATION COVERED BY SSI'S (December 2008) (Thousand People) SSK (employed) BAĞ-KUR (self employed) EMEKLİ SANDIĞI (civil servants) TOTAL 1-ACTIVES 9.767.0173.260.7192.464.206 15.491.942 2-PASSIVES 4.625.7191.795.0631.605.589 8.026.371 3-DEPENDENTS 18.259.2599.377.9605.263.145 32.900.364 TOTAL 32.651.99514.433.7429.332.94056.418.677 Active/Passive Ratio ( calculated by number of files) 2,111,821,53 1,93 EU and Foreign Relations Department

27. Financial Structure SSI BUDGET (Million ) 20082009 BUDGET2010 BUDGET2011 BUDGET Revenues 29.62937.16142.09845.622 Premium Revenues 24.02926.23629.82832.360 Other 5.60010.92512.27013.262 Expenditures 41.03946.57852.25557.880 Pension Payments 26.05230.36734.29338.133 Health Expenditures 11.16612.14213.56415.044 Other 3.8224.0704.3974.702 Deficit -11.411-9.418-10.157-12.257 Budget Transfers 15.42620.56822.93926.234 1 = 2.27 TL EU and Foreign Relations Department

28. Thanks for your attention For further information www.sgk.gov.tr Department of EU and Foreign Relations