Critical detail in pension calculation: Warning on application date

For those nearing retirement, pension calculation methods consist of a combination of many detailed and variable factors. According to experts, it is not just the number of premium days; the earnings subject to premiums reported to the Social Security Institution (SGK), the pension replacement rate, and inflation and growth figures in the economy also play a role in the pension to be granted. However, one of the most critical details is the date on which the application petition is submitted. This date can cause significant changes in pensions, especially due to the difference in the update coefficient between 2026 and 2027.

When calculating a pension, the legislation of the Social Security Institution (SGK) divides working life into three periods. The high pension replacement rates applied in the period before 1999 offer an extra advantage for those who have insurance periods remaining from that time. The period between 1999 and 2008 stands out as a period where the rate of development and different update coefficients are taken into account, and average rates are applied. After October 2008, with the new system, pension replacement rates are calculated from a lower level.

Earnings subject to premiums, the pension replacement rate, the update coefficient, and additional payments stand out as the four most effective criteria in calculating the pension. While the earnings subject to premiums are shaped by the gross salary reported to the SGK by the employer, it is stated that those working in more than one place can increase this amount. While the total number of premium days keeps the pension replacement rate at a high level, the update coefficient changes with the inflation and growth figures determined each year. Including regular additional income such as bonuses, premiums, and similar payments made to employees in the earnings subject to premiums can directly increase the pension.

The year of application is one of the most critical stages in determining the future pension. Experts draw attention to the projections announced for 2026 and 2027. If an employee submits their retirement petition in 2026, they will benefit from an update coefficient estimated at an average of 1.3197 based on 2025 economic indicators. However, those considering leaving the petition until 2027 may face an update coefficient at an average level of 1.2714 due to inflation, which is expected to trend downward.

For this reason, those who apply within 2026 will have the opportunity to have their pensions granted at a higher level. Expert opinions suggest that citizens who have become eligible for retirement should take this difference in the update coefficient into account regarding the date of submitting their petition. As a result, the timing of the application can become a significant economic advantage for many people.

News Source: 12punto