Six-month non-refundable loans to employers for severence payments

Photo: AA

Finance Minister Nureddin Nebati announced today (January 11) that the new Credit Guarantee Fund (KGF) package will support employers' severance payments. The support package announced follows a new arrangement that will eliminate the age requirement for retirement, which is expected to result in many workers opting to retire.

The minister declared that the loans to the employers for severance payments will have up to 36-month maturity terms and up to 6-month non-refundable grace periods.

Severance pay in Türkiye

In Türkiye the legislation regulates that employers pay severance allowance to the workers in case of a layoff or retirement. The allowance amounts to 30 days' salary for each full year of employment.

Announcing the decision, President Recep Tayyip Erdoğan said on December 28, "With the arrangement, nearly 2 million and 250 thousand citizens will have the right to retire."

EYT campaign "won" before elections

Millions in Türkiye are hindered from retirement due to age (shortly named EYT) because they don't meet the minimum age requirement, 60 for men and 58 for women, set by legislation amended in consecutive stages starting in 1990.

EYT campaigners demanded a new arrangement, arguing their entitlement to retirement should be set at the same conditions that were valid at the date they started to work.

With the new arrangement announced, people who have started to work before September 8, 1999, will be entitled to retirement without any age requirement in case they have the necessary number of days of work as set forth in the legislation when they started working.

"A period to share the gains with the citizens"

In a TV program this morning, Minister Nebati said that they were going to take the necessary measures for the payments of the severance allowances to those who will retire after the new arrangement.

Nebati explained that they will be depositing the severance money directly into the accounts of the employees who retire. He said, "We are telling our citizens 'Be relaxed. Do not enter into any negotiations with your employer. We will deposit your severance payment to your account."

Nebati said, " We will be announcing the KGF package today. The conditions for repayments are very favorable. There will be a maturity of up to 36 months, and a non-refundable grace period of up to 6 months. The interest rates will be quite low. And most of our private banks and financial institutions will be participating in the KGF package."

The Minister added that these decisions were not taken due to the elections, but on the contrary, they should be evaluated as a period when the gains are shared with the citizens." (PE)