Employing retirees: social security support premium and employer cost
Employing a person receiving a retirement pension: SGDP rates, unemployment insurance, cost comparison, the 5-point reduction for EYT retirees, severance pay and payroll practice.
Hiring an experienced retiree or continuing with an employee who has retired is a natural choice for many businesses. For a retired employee, the payroll differs from a normal employee's on a few points.
How does a retired employee differ from a normal employee?
| Normal employee | Retired employee (SGDP) | |
|---|---|---|
| Premium deducted | General insurance premium | Social security support premium |
| Employee share | 14% | 7.5% |
| Unemployment insurance employee share | 1% | None |
| Employer share | 21.75% | 24.75% (including short-term) |
| Unemployment insurance employer share | 2% | None |
| Allowance for sickness and maternity leave | Yes | No; only for work accidents and occupational disease |
| Income tax and stamp duty | Yes | Yes (the retirement pension is not taxed separately) |
A retired employee's net wage comes out higher than that of a normal employee on the same gross wage, because the employee share is lower and no unemployment insurance is deducted. The employer share, however, is higher under SGDP: because the treasury reduction applied to normal employees (5 pts in manufacturing, 2 pts in other sectors) does not apply to retired employees (except for the EYT reduction below), the total cost to the employer often comes out slightly higher. Make the comparison with your own figures: Salary calculator
Hiring notification
For a retired employee, the insurance type on the hiring notification is selected as "employee subject to the social security support premium". If the wrong type is selected, problems can arise with the retirement pension and a later correction is needed. The notification deadline is the same: Hiring notification
The 5-point reduction for EYT retirees
Employers who re-employ, at the same workplace, employees who retired under Law No. 7438 (the EYT arrangement) can benefit from a 5-point reduction in the employer's SGDP share. The main conditions:
- The employee's notification of leaving due to retirement and the retirement application were submitted on or after 3 March 2023,
- The employee restarts work at the same workplace subject to SGDP within 30 days of leaving,
- Returns and premiums are filed and paid on time,
- The employer has no overdue premium or administrative fine debt,
- There is no finding of uninsured employment.
The reduction is used by applying through the SGK Employer System, and the relevant law number (15510) is selected on the return. If the employee leaves once, the reduction does not apply even if they restart at the same or another workplace.
Severance pay
When the employee leaves due to retirement, if the conditions for severance pay are met, severance pay up to that date is paid (exit code 08 or 14). For a person who restarts work after retiring, length of service starts running again from the new hiring date. If work restarted without paying the previous period, combining the two periods may come up; keep your records accordingly. Calculation: Severance pay
Bağ-Kur retirees
Bağ-Kur (4/b) retirees working for wages at a workplace are also subject to SGDP. The rules are different for those who continue their own business after retirement (company partnership, sole proprietorship) and should be assessed separately: SGK status of company partners
In short
- Select the insurance type correctly.
- Apply the SGDP rates and the absence of unemployment insurance in the payroll.
- If you re-employ an EYT retiree at the same workplace, check the 5-point reduction.
- Document the severance position at the retirement date in the file.
Our related service: Payroll and SGK
Legal basis: Law No. 5510 art. 30; Law No. 7438; SGK Circular on the Five-Point Reduction in the Employer Share of the Social Security Support Premium.