Article
RETIREMENT PENSION CALCULATION
FACTORS TO CONSIDER WHEN CALCULATING RETIREMENT PENSION
Retirement pension is of great importance for an individual's financial security during retirement. The retirement process is not only a reward from the social security system for individuals who have worked for many years but also plays a critical role in maintaining their standard of living after they retire. However, retirement pension is not determined by a single factor. The calculation process is quite complex and involves many variables. For every individual reaching retirement age, this calculation includes several criteria, such as insurance premiums, the regularity of premium payments, service duration, and the last salary received.
Another important factor affecting the retirement pension is the insured period and the number of premium payment days. These periods play a critical role in determining how much a person’s retirement pension will be. For example, a worker who has been insured for a long time and has paid higher premiums will receive a higher pension. Additionally, another element considered in the calculation of the pension is the salary increases and gross earnings in the last period. Insurance premiums are also an important factor, as the continuity and amount of premium payments directly affect the pension amount. Accurately calculating all these factors is one of the most important criteria in determining the pension an individual will receive during retirement.
GROSS EARNINGS AND AVERAGE EARNINGS CALCULATION
A worker's retirement pension is directly related to the gross earnings obtained during their working years. When calculating the pension, not only the last salary but also the average of all the earnings during the working period is taken into account. In Turkey, retirement pensions are generally calculated based on average earnings, and the gross earnings of the last 7 years are used to determine an average. This ensures that individuals whose earnings have increased over time will receive a higher pension.
Gross earnings refer to the total salary a worker earns before taxes, insurance premiums, and other statutory deductions. In other words, unlike net salary, gross earnings represent the amount of the worker's salary before deductions. Therefore, any increases in earnings as a worker approaches retirement will directly affect the pension amount. For example, a worker who experiences salary increases in recent years will pay premiums based on a higher gross salary, thus receiving a higher pension. Moreover, paying premiums with higher gross earnings will not only increase the retirement pension but also improve other social security benefits and health insurance protections in the future. In pension calculation, the number of premium payment days, the amount of premiums, and increases in salary are all crucial factors.
INSURED WORKING PERIOD AND AGE CRITERIA: DETERMINANTS OF RETIREMENT PENSION
The duration of insured work is one of the most important factors determining how much the retirement pension will be. In Turkey, the duration of insured employment directly affects the pension amount. The longer a worker is insured under SGK (Social Security Institution), the higher their retirement pension will be. Individuals who have paid premiums for a long time and regularly reported to SGK will have higher pensions. This is because long-term premium payments accumulate, resulting in higher payments during retirement.
Another important criterion considered in pension calculation is the worker's retirement age. In Turkey, the retirement age varies according to the date of insurance, and insured individuals gain the right to retire when they reach a certain age. However, the earlier one retires, the lower their pension might be. Early retirement indicates a shorter period without premium payments, which negatively affects the pension amount. For example, a person who retires after turning 65 will generally receive a higher pension than someone who retires at an earlier age. Additionally, the transition to retirement age is influenced by the state's gradual retirement age limits, which also play a role in pension calculation. Early retirement decisions not only affect the pension amount but also influence long-term health and social security coverage.
RETIREMENT TYPE AND ADDITIONAL RIGHTS: FACTORS INCREASING THE RETIREMENT PENSION
Retirement pension differs according to the type of retirement chosen. In Turkey, there are three main types of retirement: Old-age, disability, and duty disability. Each of these types plays a significant role in retirement pension calculation. The retirement type is determined based on various factors such as the duration of service, health status, position in the job, and social security rights. Each type of retirement significantly affects the pension amount and determines the total pension a person will receive. Therefore, selecting the correct retirement type is a critical factor for receiving a higher pension.
Old-age retirement refers to the pension given based on working duration and age limits, while disability pension is paid to individuals who become unable to work due to health problems or accidents at work. Disability pension calculation is done differently from regular old-age pension calculation. On the other hand, duty disability is primarily applicable to public servants and refers to pensions paid to individuals who retire due to health problems that occur during their service. These types of pensions are generally calculated at higher rates and offer additional rights.
Moreover, a significant factor in increasing the retirement pension is additional payments. Additional payments are supplementary pension contributions that insured individuals can receive during their retirement period. These additional payments vary depending on the number of premium payment days, the duration of insurance, and special regulations. These supplementary payments, which increase the retirement pension, are based on personalized arrangements and social security rights. Therefore, an insured individual should consider all additional payment rights when calculating their pension.
ÖZAY ACCOUNTING SOLUTIONS
There are multiple factors to consider when calculating a retirement pension, each of which directly affects the pension's size. Premium payments, earnings averages, insured working periods, and age criteria, among others, determine how much a person will receive. Additionally, retirement type and additional rights play an important role in determining the pension. For this reason, planning for retirement and accurately calculating future pensions is a critical step in ensuring financial security.
If you would like to learn more about your retirement pension, calculate it accurately, and create the most suitable retirement plan, we, at Özay Muhasebe and Mali Müşavirlik, are here to assist you with our expert team. You can contact us for proper guidance on social security, retirement planning, and more.