With the Law No. 4447, which revealed the EYT problem and entered into force on September 8, 1999, the retirement age was gradually increased, while the pensions were also reduced. Pensions were reduced by changes in three parameters.
While calculating the pensions of those who started working before 2000, a separate calculation is made for the services before 2000, between 2000 and 2008 and after 2008.
The first of the amended parameters is the pension coverage ratio (ABO), which expresses the ratio of the pension to be paid to the premium-based earnings. A high monthly bonding rate increases the pension, while a low one results in lower pensions.
Age at retirement (EYT) covers those who started working before 8 September 1999. The monthly bonding rate for EYT members was reduced first in 2000 and then in 2008.
Before 2000, ABO was applied at 60 percent for the first 5000 days and at 1 percent for every 240 days after 5000 days. The monthly coverage ratio of a person paying 9000 days of premium was 76.7 percent.
In the period from 2000 to September 2008, ABO was applied as 3.5 percent for every 360 days of the first 3600 days of the total number of premium payment days, 2.9 percent for every 360 days of the next 5400 days, and 1.5 percent for every 360 days after 9000 days. Thus, the monthly bonding rate of an employee who pays 9000 days of premium decreased to 65 percent.
After October 2008, the rate of 2 percent for each year worked began to be applied. In this way, the monthly contribution rate of people with a premium of 9000 days (25 years) was reduced to 50 percent.
While an EYT employee with a total of 9000 days of premium is subject to a 76.5 percent pension rate when he/she starts working, he/she is sentenced to a lower pension since he/she makes a separate calculation for his/her services for three periods when he/she requests retirement.
SHARE OF WEALTH DECREASED
While calculating the pension, the current value of the earnings based on the premium reported to the Social Security Institution (SGK) throughout the working life is also taken into account. The current value of the premiums paid is calculated by the update coefficient.
In the period before 2000, an indicator-based system was used when updating. The calculation was made by multiplying the indicator and the civil servant salary coefficient. If the earnings were reported high while working, the average of the last 10 years, if low, the average of the last 5 years was taken into account. Since the civil servant salary coefficient was increased every 6 months, the use of the civil servant salary coefficient in the calculation allowed higher earnings to be updated and higher pensions to be paid.
Starting from 2000, the indicator system was abandoned. Earnings subject to premium, instead of the indicator, started to be updated at the rate of the sum of the annual increase in the consumer price index (CPI) and 100 percent of the rate of increase in national income.
For services after 2008, the share of the increase in national income in the update coefficient was reduced from 100 percent to 30 percent.
In the 2000-2008 period, in a year in which annual inflation was 10 percent and the increase in national income was 5 percent, the earnings are increased by 15 percent. However, the update rate is 11.5 percent.
LOWER LIMIT MONEY DOWNLOADED
A lower limit (minimum monthly amount) is determined so that the pensions of people whose earnings are reported to SSI at or close to the minimum wage and who have insufficient premium days are not excessively reduced. One of the important factors that reduced the pension was the lowering of this lower limit pension. This change negatively affects people whose earnings are reported to SSI as low and who have less premium days.
When calculating the pensions of EYT members, the minimum monthly rules are applied separately for the services before 2000, between 2000 and 2008 and after 2008.
The lower limit on the pension for services before 2000 cannot be less than 70 percent of the lowest premium earning. In the 2000-2008 period, this rate was reduced to 35 percent of the minimum wage. In the period after 2008, 35 percent of the minimum wage is applied. The minimum salary of those who have dependents cannot be less than 40 percent of the minimum wage.
PENSIONS DROPPED AS YOU WORK
Due to these changes made against the employees in the pension parameters, the pension of the low paid employees decreases as they work. Since the pension is calculated with a complex system, it is difficult to understand and explain the decrease in the pension as you work.
To put it simply, when a person with EYT applies for retirement today, first of all, a “full month” is calculated for three periods separately, according to the rules of each period. Then, the working time in each period is divided by the total premium days and the “partial monthly” amount is determined for that period. The partial pension for three periods is collected and the pension is paid.
In short, in this complex system, as the working hours of those working with minimum wage and earning close to it increase after 2008, their pensions decrease rather than increase. They are increasingly sentenced to lower pensions.
Here, a question may rightfully arise: “Will the pensions of those who started working for the first time after 2000 and 2008 also decrease as they work?” Their pensions will be even lower, but that doesn’t mean they “decrease as they work”. Because those who started working for the first time after 2000 and 2008 have lost in advance. In order to increase their pension, they will have to work harder and increase their bonus days.
Tomorrow: HOW MANY PEOPLE FROM EYT?