In Germany, the retirement age is gradually being increased to 67 years. France is 64 years old. In Turkey, President Erdogan is instead going the opposite way, sending millions into early retirement. Brilliant or fatal?
The reaction followed immediately. Shortly after Turkish head of state Recep Tayyip Erdogan announced at the end of December that the minimum retirement age would be lifted, long queues formed in front of the pension authorities. For more than two million Turks, the dream of early retirement was suddenly within reach.
For example in the Unkapani district of Istanbul. “Actually, at 49, it’s still too early. But if the state offers you this opportunity, you should take advantage of it.” Toy salesman Murat said this in a radio broadcast by “NDR”. The restaurateur Aysegül said: “Admittedly, retiring at 43 is early. But it’s incredibly stressful in this country, especially for working mothers.”
In Turkey, the retirement age for most people is 58 for women and 60 for men. Erdogan’s pension plan has not yet been cast in law. However, it is to be brought before Parliament and passed in the course of January.
From then on, anyone who has been employed for at least 7,200 days in their life and is subject to social security contributions can retire. Roughly speaking, it could be over after a good 25 years. For government employees and the self-employed, the limit is 9,000 days. So the previous announcements.
In fact, according to indications, only 5,000 working days could be enough for employees and workers to retire. In the professional group of the self-employed, farmers and civil servants 9000 days for men and 7200 days for women. The final valid details are currently being worked out.
But why is Erdogan doing this and to whom do the new rules apply?
In October, the republic celebrates its 100th birthday. The 68-year-old president still wants to be in office. Parliamentary and presidential elections are held in June. The polls for Erdogan himself and his AKP have rarely been worse in the 20 years of their rule. Turkey is currently a long way from its own claim and publicly announced goal of being one of the ten largest economies in the world in the 100th year of the founding of the state.
The country, on the other hand, achieves peak values when it comes to inflation, which is officially around 64 percent. Other calculations come to 100 percent. Food and other everyday goods in particular have recently become more and more expensive.
The Turkish central bank reacted rather unorthodoxly by further lowering the key interest rate from 12 to 10.5 percentage points at Erdogan’s behest. Interest rates are usually raised when inflation is high, see USA, see euro area.
The pension reform also appears to be unorthodox. Of the almost 85 million Turks, 13.9 million are pensioners. With the abolition of the minimum age, 2.25 million more could soon follow. The President did not provide any information on the costs. His Labor Minister spoke of the equivalent of around five billion euros.
Experts believe that 12 billion euros is more realistic. In the coming years, the amount is likely to rise even further, especially since a good two million employees are expected to make use of the pension offer.
Kerem Gabriel Öktem researches the political theory of the welfare state at the University of Bremen. He is very familiar with the Turkish pension system. “It is not clear how the reform will be financed in the long term,” he told FOCUS online.
If you retire earlier, you won’t pay any contributions for longer. A problem for every pension system, which the economic expert Senol Babuscu summarized on Turkish television: “It will be at the expense of future generations.”
In a radio report by the “NDR” from Istanbul, a young woman who stood in the approximately 30 meter long queue in front of the pension authority for her uncle and preferred to keep her name to herself described the reform as “fraud”. Because: “Since many continue to work despite retirement, this is not really a pension.” Turkey expert Öktem makes it clear: “As in Germany or other countries, many will continue to work in some form despite retirement.”
Of course, only a few in Turkey can afford to be lazy in their early 50s. And collecting a pension plus earning extra money sounds attractive to many. But not everyone will benefit from the new pension model anyway. “The pension reform only affects people who were already members of social security funds before September 1999,” Öktem clarifies. “Everyone else gets nothing.”
The next pension reform is already programmed, “because of course people who entered the labor market after September 1999 also want to have the same rights.”
The pension after 7,200 working days (or earlier) is considered an early election gift from Erdogan. In fact, it wasn’t his idea at all. On the contrary. “This pension reform was originally a demand from civil society, which the largest opposition bloc, the ‘Alliance of the Nation’, in particular adopted,” explains Öktem.
“Erdogan, who actually rejected this for years, has now grabbed the issue and implemented it half a year before the elections,” said Öktem. “Also to take the wind out of the opposition’s sails.”
The 2023 pension reform basically takes away part of the 1999 pension reform. Until now, there was the right to retire after 25 (men) or 20 (women) years of membership in social security funds and a certain number of contribution days – and not only with 58 for women and 60 for men.
According to the expert, this retirement age only applies to those who entered the system between 1999 and 2008. “For people starting work today, the retirement age for both men and women is 65.”
In this context, the scientist points out another peculiarity of the Turkish pension system, which could lead to enormous problems in the case of many sudden retirements. “Companies sometimes have to pay high severance payments to employees who retire,” reports Öktem.
This poses financial challenges. “In fact, the state is planning to provide particularly cheap loans for these severance payments in order to bridge liquidity bottlenecks,” says Öktem.
But one question remains: Why is there already this rush to the new pension if the law is not yet in force? “The queues in front of the pension authorities have formed because people want to have periods taken into account for the pension, for which they then have to pay pension contributions so that they have enough contribution days to go into retirement immediately after the reform comes into force,” says Weiss Kerem Gabriel Öktem.
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