EXTENDED SUMMARY

Paragraph 1 of Article 40 of Law no. 5510 with the heading “Actual service term increment” stipulates that “The number of days indicated corresponding to each 360 days of the service terms passed at the following workplaces and works shall be added as actual service term increment to the numbers of paid premium days of the insurance holders working at such workplaces and works under items (a) and (c) of paragraph one of Article 4.”

Actual service term increment has two functions. The first one is that the increment periods are added to the number of paid premium days to benefit from the long-term insurance branches of the insurance holder. The second one is that half of the increment period is subtracted from the retirement age limit.

Nominal service time increment is the hypothetical working time taken into account regarding pensions and single payments to be granted to the insurance holder. Therefore, unlike the actual service time increment, the nominal service time increment does not increase the number of paid premium days in terms of long-term insurance branches and does not provide a decrease in the retirement age limit. In other words, it does not affect the required conditions for entitlement to the old-age pension. Still, it only increases the amount of the monthly or single payment to be made to the insurance holder.

Although the term “nominal service time increment” is used for legal institutions regulated in Additional Article 5 of Law no. 506 and Article 49 of Law no. 5510, in fact, the nominal service time increment regulated in Additional Article 5, the actual service time increment regulated in Article 40 of Law no. 5510, and the actual service time increment regulated in Articles 32 ff. of Law no. 5434 are similar institutions in terms of enabling insurance holders to be entitled to a pension under more manageable conditions. In contrast, the nominal service time increment regulated in Article 49 of Law no. 5510 and the nominal service increase regulated in Article 35 of Law no. 5434 are similar institutions only in terms of increasing the amount of monthly or single payment to be granted to the insurance holder.

Since the actuarial balance of social security organizations deteriorates as a result of the rapid increase in the number of retirees at an early age and the burden imposed on the budget due to the expenditures made to ensure the balance increases, Law no. 4447, which entered into force on 08.09.1999, aggravated the pension granting conditions in laws no. 506, 2925, 5434, 1479, and 2926, and the pension granting conditions for those who had become insurance holders or participants before 08.09.1999, when the Law entered into force, have been gradually increased based on their insurance terms and premium payment terms.

After the annulment of subparagraphs (B) and (C) of Provisional Article 81 of Law no. 506 by the decision of the Constitutional Court, dated 23.02.2001 and numbered 1999/42 Docket – 2001/41 Decision, the gradual transition system was preserved with some differences by amending it with Law no. 4759 dated 23.05.2002 entering into force on 01.06.2002. As per the said article, the conditions for granting an old-age pension are determined taking into account how many years the insurance period is on 08.09.1999, when Law no. 4447 enters into force, and on 23.05.2002, when Law no. 4759 is adopted.

The existence of actual (Article 40 of Law no. 5510) and nominal service time (Additional Article 5 of Law no. 506) increments that must be added to the service of the insurance holder is vital in terms of the insurance holder’s entitlement for the old-age pension (or entitlement at an earlier date). As it is stipulated in the decision of the Great General Assembly of the Court of Cassation for the Unification of Case Law, since the nominal service term regulated in Additional Article 5 of Law no. 506 will be added to the insurance term, the increment of the insurance holder’s insurance term before 25.05.2002 and the nominal service term increase to which they are entitled under Additional Article 5 in proportion to this period are directly effective in entitlement to a pension according to Article 81 of Law no. 506, which contains regulation based on the total insurance term in terms of entitlement to a pension.

The applicable law, in terms of entitlement to the old-age pension, is not Law no. 5510, but the law covering the insurance holders in the previous period due to the references in Law no. 5510. Therefore, based on the previous tripartite structure in our social security system, the Laws numbered 506, 2925, 1479, 2926, and 5434 are essential in entitlement to the old-age pension.

There is a terminological conflict between the laws. Consequently, there is a problem of to what extent the insurance holder, who is subject to Law no. 5434 but then continues to work under Law no. 506 and makes a claim for an old-age pension under this Law, can benefit from the actual service time increment and nominal service time increment regulated within the framework of these laws.

As clarified in the study, leaving aside the terminological confusion, one should start from the point where the right to social security is expressed in the laws and observe the fact that the concept of nominal service regulated under Law no. 506 is the same thing as the actual service term increment regulated in Law no. 5434, and thus, adjudicate in favour of the advantage of the number of paid premium days manifestly provided to the insurance holder by the said increment and the right to retire at an earlier age.