MANDATORY STATE SOCIAL SECURITY
Employees’ & Employers’ Contributions
All employees must be registered with the Social Security for healthcare benefits, work-related accident and illness, sickness, pregnancy, disability, old age and death.
Employees’ and employers’ contributions are calculated as a percentage of gross salary. Employee deductions reduce the taxable income.
Currently, office-based employees pay 14% and employers pay 15,5% (Normally Employers’ contribution is 20.5%. Government incentive of %5 is given to Companies due to recession). Cap of monthly earnings subjected to premium deduction is TRY 13.331,40 for 2017.
Unemployment insurance premiums will be imposed on the employee and the employer at 1% and 2% respectively with a cap of TRY 13.331,40.
Additionally, the government will also be required to contribute 1% on behalf of the employee.
Payments to Authorities
Monthly employee and employer contributions document should be submitted online by the 23th of following the month document belongs to, and premiums should be paid at the end of following the month.
VOLUNTARY PRIVATE PENSION
The voluntary Turkish private pension system (Individual Retirement Insurance) is a defined contribution system, intended to be complementary to the mandatory state social security scheme, which provides retirement earnings to participants on a PAYE basis.
Employers’ contributions to Individual Retirement Insurance are tax deductible up to 15% of monthly wage with a cap of annual gross minimum wage (TRY 21.330,00 for 2017).
Employers’ contribution to Individual Retirement Insurance and private health insurances shall be deducted from earnings subjected to premium up to 30% of monthly gross minimum wage.
PRIVATE HEALTH AND LIFE INSURANCE
Although state social security (SGK) covers healthcare services, some Turkish people and most of the foreign employers and employees choose to have also private cover due to shorter waiting lists and foreign language speaking staff of private hospitals.
Some employers chose to provide private health and life insurances for their employee as in kind benefit.
Tax / Premium Exemption
The premiums paid to private health and life insurance institutions are deductible from the income tax liability, up to 15% of monthly wage with a cap of annual gross minimum wage (TRY 21.330,00 for 2017). Employers’ contribution to and private health and life insurances will be deducted from earnings subjected to premium up to 30% of monthly gross minimum wage.
AUTO ENROLMENT PRIVATE PENSION
As of 1 January 2017 Turkish citizen employees who are under the 45 years of age and working against wage under a service contract (in the scope of Law No. 5510, articles 4/a, and 4/c) will be automatically enrolled in a pension plan arranged by employers.
Participant employees may have the right of withdrawal from the system within two months.
Auto enrolment Private pension system is intended to be complementary to the mandatory state social security scheme, and to improve the welfare level of employees by providing a supplementary income during retirement. It is also expected to increase the domestic savings, which is crucial for Turkish economy.
Workplaces has started to enter into contracts with pension companies and offer pension plans to the employees in the scope of Law on different dates, depended on their number of employees.
The savings in the voluntary private pension cannot be transferred to mandatory (auto enrolment) pension plans.
All employees under 45 years of age will be automatically enrolled in new arranged pension plan as of 1 January 2017, whether they are participated in voluntary system system or not.
Employees enrolled in the voluntary system may either chose to continue to participate in both system or may withdraw their savings from the voluntary one.