After years of debate, the president has announced key measures to relax retirement eligibility rules for the so-called “hindered from retirement due to age” (Emeklilikte Yaşa Takılanlar – EYT) cohort of employees. The cohort was created in September 1999 when eligibility requirements to commence social security retirement benefits were changed effective immediately for all employees: A minimum retirement age (58 for women and 60 for men) was introduced and the minimum paid premium period was increased (to 7,000 days from 5,000 days). The related eligibility requirement on minimum years of insured service (20 for women and 25 for men) was unchanged. The EYT group consists of workers who were in employment before September 8, 1999, and who still haven’t met the age requirement but have met the other eligibility conditions. EYT employees have long demanded that they be permitted to retire, but the government has resisted this primarily for cost reasons. Formal legislation is expected to be submitted to parliament and approved in the coming weeks, with changes effective as of January 1, 2023.
The relaxed eligibility rules may create a wave of accelerated retirements. According to OECD projections, social security retirement income is estimated to replace 103% of preretirement pay, net of tax, for a new worker with earnings at the national average. Besides the human resource issues presented by greater-than-expected retirements, a financial strain could also be put on employers due to the mandatory end-of-service lump sum payable. Employers should prepare for the potentially significant workforce and financial implications of the announced changes and monitor progress of the forthcoming legislation as well as any further program details.
