SOCIAL SECURITY SYSTEM IN TURKEY

1. SOCIALSECURITY SYSTEMIN TURKEY

2. CONTENTS • Social Security Reform • Institutional and Legal Framework • Social Security Schemes • Statistical Data about the Turkish Social Security System • Recent Developments

3. SOCIAL SECURITY REFORM • Why was there a need for a reform in the social security in Turkey? • Demographic Changes:Increase of share of the age group of 65 and over in total population results in both increase in expenditures of the social security system and decrease in income of the system. Turkey has a younger population now. However, projections on the future show that Turkey’s population would swiftly get older.

4. SOCIAL SECURITY REFORM 2.Financing problems:Financial problems of the social security system in Turkey partly stems from income lowering and from expense boosting developments and practices. • Early Retirement: 60% of individuals retired from former social security institutions is below age of 58 to 60. • Under Declaration of Income used as basis for contribution: Especially, around 60% of workers insured in the scope of employed are paying premiums from minimum or a little higher. • Low the number of premium days :For self-employed and civil servants the number of premium days is still 9000 whereas it is 7000 days for workers.

5. SOCIAL SECURITY REFORM • High level of unregistered employment:Because of high unregistered employment rate, our premium income is dropping at the same time many unregistered employees do not have access to social security.( unregistered employment rate is 42,3%) • Low level of contribution collection • Replacement Rate:In present situation, when replacement rates of three social security institutions are compared it is seen that replacement rate of SSK is very close to the net income of participants whereas replacement rates of Bag-Kur and Civil Servants’ Pension Fund are higher.

6. SOCIAL SECURITY REFORM 3. Lack of Uniformity of Norms in terms of Social Security Rights and Obligations:One of the most important purposes of the social security policies is to support fight against social inequalities through establishment of security networks among people. In this sense, the State is obliged to build a social security system which comprises equal rightsand obligations for all individuals.

7. Main Elements of Social Security Reform • First element is to establishment of a new institutional body. With 5502 Social Security Institution Law, Social Insurance Institution, Retirement Fund, and Bağ-kur is unified under one roof,SSI.(May 2006) • Second element is to establish a retirement pension system that equals the rights and obligations and is financially sustainable.(October 2008) • Third element is to establish a general health care system which aims to provide easy-to-access and high quality health care for entire population. (October 2008)

8. Main Elements of Social Security Reform • Fourth element is to establish a social assistance systemwhich can screen social assistance distributed from different institutions and will collect and conduct the social assistance from one source according to objective criteria. For this purpose, Directorate General of Non-contributory Payments is established.

9. LEGAL BASIS • 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

10. INSTITUTIONAL FRAMEWORK SSI which was set up in 2006 is an affiliated body of the Ministry of Labour and Social Security SSI has administrative and financial autonomy. The Executive Board is the highest administrative organ of the institution. It is composed of the representatives of MoLSS, Ministry of Finance, Undersecretariat of Treasury, employer organisations, trade unions of workers and civil servants, association of the self -employed and association of retirees. The Executive Board is chaired by the President of the SSI.

11. ORGANIZATIONAL CHART OF THE SOCIAL SECURITY INSTITUTION

12. MAIN SERVICE UNITS • General Directorate of Social Insurances: General Directorate of Social Insurances is commissioned • to implement social security services in short term and long term insurance benefits • to collect premiums • to inform the insured, entitled persons and employers concerning their rights and responsibilities arising from social security legislation by all means of communication • to carry out the necessary operations for the collection and pursuance of unemployment insurance premiums in accordance with the laws. 12

13. MAIN SERVICE UNITS 2.General Directorate of Universal Health Insurance: General Directorate of Universal Health Insurance is commissioned • to protect the health of individuals • to ensure financing of expenditures which occur in the case of health risks • to inform the universal health insurance holder, their right holders, and employers concerning their rights and responsibilities arising from universal health insurance legislation by all means of communication

14. MAIN SERVICE UNITS 3.General Directorate of Non-Contributory Payments: General Directorate of Non-Contributory Payments is commissioned • to make arrangements on payments that the state execute without contribution and ensure coordination • to establish social security network that will cover all people in need • to determine basic principles of social assistance • to ensure the coordination of all social assistance made through public sources • to carry out duties and procedures on other non-contributory payments paid through special laws

15. MAIN SERVICE UNITS 4.General Directorate of Service Provision: General Directorate of Service Provision is commissioned • to ensure fulfilment of the continuous service provision by the Institution to real and legal persons • to carry out the procedures and operations related to the establishment and closing of provincial organisational • to carry out all kinds of information services of the central and provincial organisation of the Institution • to develop the social security database • to plan, develop, establish, operate and renew necessary software and hardware infrastructure for the Institution, and to take necessary measures to ensure security and sustainability of this infrastructure

16. MAIN SERVICE UNITS 5.Presidency of Guidance and Inspection: Presidency of Guidance and Inspection is commissioned • to inspect the implementation of social security related provisions with an understanding that uses an informative and guiding approach which aims at preventing infringements/irregularities • to prevent unregistered employment, to combat social security abuses/corruptions and for this purpose to carry out inspections based on sector analysis and to recommend necessary measures to be taken in relation with these issues • to analyze persons obliged to pay premiums in terms of groups and sectors, to prioritize inspection of sectors by categorizing sectors in accordance with risk evaluation criteria to be defined annually • to review all records and documents related to their tasks, to request and collect information from the relevant parties

17. MAIN SERVICE UNITS 6.Department of Actuaries and Fund Management: Department of Actuaries and Fund Management iscommissioned • to revaluate the cash and other similar property of the Institution by using financial instruments • to make projections based on short-term, mid-term and long-term actuarial principles in terms of population and financing, to compile all kinds of statistical information regarding finance, fund management and actuaries, to evaluate this information and report the results to the relevant units

18. ADVISORY UNITS 1.Strategy Development Presidency: Strategy Development Presidency is commissioned • to do necessary work in order to develop medium and long-term social security aim, strategy and policies • to improve performance and quality criteria in the fields the SSI involved • to corporate with EU and international organizations • to follow and encourage scientific publications related to the Institution’s fields of work

19. ADVISORY UNITS 2.Law Consultancy: Law Consultancy is commissioned • to arrange necessary legal bid, • to deliver opinion on legal issues, • to take legal measures in time, • to represent the Presidency in court cases where the Institution is one of the parties

20. ADVISORY UNITS 3.Media and Public Relation Presidency: Media and Public Relation Presidency is commissioned • to do necessary work in order to plan and to execute media and public relation related activities • to finalize the information applications efficiently, quickly and accurately.

21. Internal Audit Department Internal Audit Department is commissioned • to asses and guide whether the resources are managed according to the principles of economy, effectiveness and efficiency

22. SUPPORT SERVICE UNITS 1. Department of Human Resources Department of Human Resources is commissioned • to work on the manpower planning and policy of the institution and to make recommendations • to carry out the operations regarding the appointment, transfer, registry, promotion, wages, pension and similar matters pertaining to personnel of the Institution • to prepare, implement, and evaluate the training programs for staff trainings 22

23. SUPPORT SERVICE UNITS 2. Department of Support Services Department of Support Services is commissioned • to carry out the procurement of goods and services and to provide administrative and financial services including sale, procurement, leasing, repair and maintenance and archiving with regards to movable property as required by public services • to keep the record of movable property 23

24. SUPPORT SERVICE UNITS 3. Department of Constructions and RealEstate • to carry out all kinds procurement, sales, construction, maintenance, repair, and modification work regarding the immovables. • to rent, procure, and construct service buildings required by the Institution or to get them constructed; or to get them directly constructed by public institutions and organizations, as well as the institution’s subsidiaries within the framework of the protocol, to be covered from the funds allocated form the relevant sections of the budget and/or in Exchange of any fields, lands and buildings that are owned by the Institution 24

25. PROVINCIAL ORGANIZATION • The provincial organization of the Presidency consists of provincial social security directorates in province and social security centres to be established as affiliated bodies of the provincial social security directorates. • A sufficient number of social security centres may be established according to the population, number of insured and number of those with a universal health insurance, number of workplaces, intensity of operations and other criteria to be specified; they might be abolished in a similar manner. 25

26. PROVINCES SocialSecurityCenters

27. PROVINCES Social Security Centers

28. STAFF OF SSI

29. Social Security Schemes • Short-termInsurance Brances • Work Accident and occupational diseases, • Health Care, • DiseaseandMaternity • Long-termInsurance Branches • Old Age, • Invalidity, • Survivorship • Unemployment (responsibity forISKUR) • Non-contributory payments

30. Premium Rates

31. Scope Employed(The agricultural employed are not covered), self employed, civil servants Conditions Work accidents and occupational diseases: • Does not cover civil servants • The work accident should occur at the work place and result from the activities performed due to work. • The occupational disease should be documented by medical reports and be certified by the health board as an effect of the profession. • Sickness and maternity: • In order to benefit from allowance for temporary incapacity, the workers and the self employed should have paid/notifiedpremiums for at least 90 days in the previous one year term. • For nursing allowance, 120 days of premium payment in the previous one year term. • No premium debts for the self employed. - Allowance for temporary incapacity (excepting civil servants) • Nursing allowance Benefits Short Term Insurance (work accidents,occupational diseases, sickness, maternity) 31 EU and Foreign Relations Department

32. Scope Employed, self employed, civil servants Conditions Minimum 60% loss of working capacity or earning capacity in their profession after a work accident or an occupational disease. Contribution period: Minimum 10 years of insured employment and 1800 premium days. 10 years of insured employment is not needed for those who need constant care by others. Only 1800 premium days is enough. For the self employed, no premium debts including UHI premiums. Invalidity pension Benefits Invalidity 32 EU and Foreign Relations Department

33. Scope Employed, self employed, civil servants Conditions Age : 58 for woman 60 for man (gradually increasing to 65 as of 2036)‏ Contribution days: contributory period of 9000 premium days for civil servants and self employed; 7200 premium days for workers Easy conditions for early aged who is 55. Easy conditions for disabled persons. Benefits Old age pension, lump sum payment Old Age 33 EU and Foreign Relations Department

34. GRADUAL AGEING 34

35. EARLY RETIREMENT OF THE INSURED HANDICAPPED • 16 years 4320 days if the rate of incapacity to work is %50-59, • 18 years 4680 days if the rate of incapacity to work is %40-49 35

36. SPECIAL REGULATIONS FOR INSURED WOMEN Insured women with children who are temporarily in need to be taken care of another person , are given the convenience as to add ¼ of their service period both to premium payment days and to reduce age of retirement. unpaid birth or maternity leave terms granted pursuant to Laws and terms requested by female insurance holders under item (b) of paragraph one of Article 4, for twice, but not exceeding two - year period following the date of birth, provided that the concerned individual does not work at workplace on service contract and the child lives On condition that insured for women who have to quit work after giving birth and the child is alive, they are given the opportunity to in debt their 4 years in maximum for two times 36

37. Personal Scope Widow/ers, orphans and parents of the employed, self employed, civil servants Conditions Contribution days: 1800 days of contribution for workers, civil servants and self employed. Survivors can apply for pension if the deceased/departed had been insured for 5 years and had 900 days of premium payment. (For only self-employed people) Benefits Old age pension, lump sum payment, marriage allowance and funeral allowance. Survivorship 37 EU and Foreign Relations Department

38. ALLOCATION FOR MARRIAGE AND FUNERAL 38

39. 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 • 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 Conditions Health Care (1)

40. Health Care (2) Benefits Personal health care services Protective health services to prevent addiction to harmful substances (such as smoking etc.) Inpatient and outpatient services in case of illness Inpatient and outpatient services in case of maternity Certain dental treatments Fertility treatments under given conditions Health Care Services NOT Provided Unnecessary medical treatments (Plastic surgery etc.) Services which are no licensed by the Ministry of Health or not considered as medical treatment Previously determined chronic illness before the coverage of the UHI for the foreigner

41. Personal Scope Employed Conditions • Involuntarily unemployed, • With 120 days of permanent work prior to redundancy, least 600 days of unemployment insurance contribution in total • Fully capable of work • Registeredwith the Turkish Employment Institution and actively seeking work Benefits Unemployment payment for certain period according to contributory period Unemployment

42. Non – Contributory Payment

43. Voluntary Insurance

44. EMPLOYEES TRANSFERRED ABROAD • In current practice, for employees transferred to countries of where a social security contract is not signed, group insurance at 25% or voluntary premium is taken. • By this law, these are obliged only within the context of short-term and public health insurance, continuing to voluntary insurance is provided if they wish. Premiums are determined between 13,5% and 19 % so that, these employers’ premium loans are lightened. 44

45. FOREIGN SERVICE BORROWING • According to the law no.5510, a day loan cost is determined at 32% of the choice of the insured between lower and upper limits of premium based income. • The Council of Ministers is the authority for the determination of the lower limit of loan based income as a different rate. • People of the same line acquired Turkish nationality because of being forced to emigration from 1989 are provided with the opportunity of foreign service borrowing according to law no 3201. 45

46. UNREGISTERED EMPLOYMENT • Authority is given for imposing obligation for making all payments of employers subject to premiums paid to the insured via banks. • There are regulations about data share concerning the requirement of insurance inquiry in some transactions of public administrations and banks. • Administrative penalties for unregistered employment are raised enough to be aversive 46

47. STATISTICAL DATA FOR TURKISH SOCIAL SECURITY SYSTEM • Population Covered by Social Security Schemes • Financial Structure

48. POPULATION COVERED BY SSI

49. FINANCIAL STRUCTURE 1 € = 2.27 TL

50. HEALTH EXPENDITURES 1Euro =1,97 TL