Social Security Chief Expert İsa Karakaş: There may be a 50 percent increase in the severance pay ceiling

In years with high inflation, the date of submitting a retirement application significantly affects the initial pension to be received. When the Social Security Institution (SGK) calculates the pensions of employees retiring, it processes the transaction based on the earnings subject to premiums reported to the institution throughout the person's working life, the number of premium payment days, and the pension accrual rate. However, in years with high inflation, the date of submitting the retirement application is also important in terms of the amount of the initial pension to be received. If two people with the same number of premium days, earnings subject to premiums, and pension accrual rates submit their applications, one before December and the other after January, the first month of the new year, differences arise between the pensions received. In this context, there was a 9 percent difference between the pensions of two people with the same earnings subject to premiums and pension accrual rates who retired in December 2021 and January 2022.

Speaking on the subject, Social Security Chief Expert İsa Karakaş evaluated how retirement pensions are formed and the reasons for the differences that occur. Karakaş stated that the issue of what kind of differences are created by retirement applications submitted before and after the new year and how these differences are reflected in pensions is one of the topics that citizens are most curious about.

Stating that the Social Security Institution (SGK) takes into account the earnings subject to premiums, the number of premium payment days, and the pension accrual rate when calculating pensions, he said, "Your salary reported to the SGK every month while working, your overtime, and the sum of all your wages are taken as a basis. Having high earnings is the number one factor in whether the salary to be received will be high or not. Again, your number of premium payment days. That is, how many years of service do you have, how many premium days do you have, is it 7 thousand days, 8 thousand days, 9 thousand days, or 10 thousand days? These are extremely effective. Especially for those who entered the system after 2008, the more they work, the higher the pension accrual rate becomes. Therefore, salaries are also higher."

Expressing that another factor taken into account in determining retirement pensions is the pension accrual rate, Karakaş stated, "When we look at the system regarding the connection of retirement pensions by the social security institution, we see that there is a strong distinction. The first is work before the year 2000. Here, the pension accrual rate is very high. When we come to the period between 2000 and 2008, the pension accrual rate drops a bit. After 2008, the pension accrual rate drops completely. Therefore, when the SGK makes a salary calculation, the salary is connected through this hybrid system."

THE YEAR DIFFERENCE BETWEEN PUBLIC EMPLOYEES AND PRIVATE SECTOR EMPLOYEES

Karakaş stated that there is a difference in the concept of the year between private sector employees and public employees, and provided the following information: "When private sector workers submit their applications between January 1, 2023, and December 31, 2023, the application is considered to have been submitted within the year 2023. However, since salaries in the public sector are generally received on the 15th of the month, the year starts on January 15, 2023, and ends on January 14, 2024. Therefore, for private sector workers, if they submit their applications on or before December 31, 2023, their salaries will be calculated differently. But if they submit them after January 1, 2023, the calculation of their salaries will be different. However, when we look at public workers, if they submit their applications by January 14, 2024, even if the day of December 31, 2023, has passed, their salaries will still be calculated according to 2023."

IT IS MORE ADVANTAGEOUS FOR PRIVATE SECTOR WORKERS TO SUBMIT APPLICATIONS AFTER JANUARY 1, 2024

Stating that inflation is also an important factor in the connection of retirement pensions, in addition to the existing factors, Karakaş said, "The inflation rate reached 61.98 percent annually as of November. Again, the rate we call growth, or development speed, in the medium-term program was 4.4 percent. It is, of course, wrong to make a generalization for all SSK and Bağ-Kur members. However, when we make a general assessment, we see that when the December inflation also emerges and this rate is above 65 percent and the growth rate is 4.4 percent or more, it is more advantageous for private sector workers to submit their applications after January 1, 2024."

IF THE INFLATION RATE IS HIGH, IT IS MORE ADVANTAGEOUS TO SUBMIT AN APPLICATION IN THE NEW YEAR

Reminding that the year-end inflation expectations are 67.22 percent, Karakaş stated, "If the December inflation comes out high, that is, if it comes out as 4 percent, 5 percent, 6 percent, I repeat, it needs to be evaluated on an individual basis, but in general, those who submit their applications in January will be more advantageous. When inflation is around 65 percent, we do not foresee a very large difference like last year. However, when the inflation rate is 67 percent or higher, as in expectation surveys, the gap will of course widen."

THERE MAY BE A 50 PERCENT INCREASE IN THE SEVERANCE PAY CEILING

Stating that there will also be differences in the severance pay that employees who will retire will receive in the new year, Karakaş included the following statements:
"When we look at the current severance pay, we see that it is 23 thousand 498 liras. That is, a worker who will retire in December, even if their salary is 50 thousand liras or 60 thousand liras, their severance pay will be 23 thousand 498 liras. The calculation will be made over this. Again, for an employee working on the minimum wage, severance pay will be calculated over 13 thousand 414.50 liras. However, when we come to January, there is also an expectation that the current minimum wage will increase by at least 50 percent. Therefore, if one retires in January, I am speaking for those on minimum wage, since the salary will be calculated over the minimum wage, there will be an increase of almost 50 percent in severance pay. Again, for workers who receive very high salaries, although they currently receive 23 thousand 498 liras over the ceiling, considering the inflation data and the civil servant salary coefficients, there will be an increase of about 50 percent in the severance pay ceiling. Thus, there will be a ceiling of around 35 thousand liras."

News Source: 12punto