Bağ-Kur (4/B) 2025 Social Security System Analysis

Bağ-Kur (4/B) 2025 Social Security System Analysis. This report provides an in-depth examination of the Bağ-Kur system, which was established as the social guarantee for independent workers in Turkey and is currently regulated under the 4/B status within the framework of Law No. 5510. The study analyzes the system’s historical evolution, its principles for calculating premiums and retirement pensions, its legal complexities, and specifically the projected costs and critical legal reform expectations (the 7200-day equalization) for the years 2025 and 2026 from an actuarial and legal perspective.

Part 1: Historical and Legal Foundations of the Bağ-Kur System

1.1. Establishment and Purposive Expansion of the System (1971-2006)

Bağ-Kur (The Social Security Institution for Tradesmen, Artisans, and Other Independent Workers) was established in 1971 under Law No. 1479. Its primary purpose was to provide social security coverage to tradesmen, artisans, and self-employed professionals who worked on their own behalf and account, independent of a service contract. Initially, the institution operated as an autonomous public legal entity, financially and administratively independent, and affiliated with the Ministry of Labor and Social Security, subject to this Law and private law provisions. This period of financial and administrative autonomy allowed the institution to manage its own funds and independently evaluate insurance risks.

Historically, the scope of Bağ-Kur was expanded to include various groups of independent workers:

Mukhtars (Village/Neighborhood Heads): Under Law No. 2108 dated August 29, 1977, Village and Neighborhood Mukhtars were included in the 4/B scope, provided they were not affiliated with any other social security institution.
Farmers: Under Law No. 2926 dated October 17, 1983, farmers working independently in rural areas were also brought under social security coverage.
Turkish Citizens Abroad: Under Law No. 3201 dated May 8, 1985, Bağ-Kur also undertook services related to the assessment of periods spent abroad by Turkish citizens for their social security purposes.

1.2. Merger of Social Security Institutions and the Legal Status of 4/B

In 2006, with the Social Security Institution Law No. 5502, all social security institutions in Turkey (SSK, Bağ-Kur, Emekli Sandığı) were unified under the roof of the Social Security Institution (SGK), and the legal entity status of Bağ-Kur was terminated. Today, the form of insurance known as Bağ-Kur is regulated under subparagraph (b) of the first paragraph of Article 4 of the Social Insurance and General Health Insurance Law No. 5510, and is therefore referred to as 4/B.

The loss of financial and administrative autonomy following the merger ensured the integration of the 4/B status with the central budget of the SGK. This integration has led to a structure that requires direct control and approval from the Ministry of Treasury and Finance for the implementation of major social security reforms, such as premium equalization, which carry significant financial costs. Consequently, legal reforms affecting 4/B are now evaluated not only as social policy but also as a financial regulatory tool aimed at maintaining macroeconomic stability.

The termination circumstances of compulsory 4/B insurance differ due to the nature of the status. For example, the 4/B insurance of tradesmen and artisans exempt from income tax is terminated when their registration is deleted from the tradesmen and artisans registry. Similarly, the insurance of jockeys, trainers, or board members ends upon the termination of their duties. Furthermore, the emergence of employment under an employer, which requires compulsory 4/A (SSK) status, terminates compulsory 4/B insurance.

The complex legal history of this status (former laws 1479, 2926, 2108) forms the basis for the difficulties encountered in today’s pension calculation process. The necessity of using formulas corresponding to three different periods in actuarial assessments to address the inequalities created by past legal differences is an inevitable consequence of this historical diversity.

Part 2: Special Cases and Legal Disputes in 4/B Status

2.1. Compulsory 4/B Status for Company Partners and Conflict Rules

According to the Turkish Commercial Code, partners in limited liability companies (Ltd. Şti.) and board members/certain shareholders in joint-stock companies (A.Ş.) are subject to compulsory 4/B insurance.

Social security legislation, a priority rule is applied when insurance statuses conflict. In company partnerships, the person’s actual economic activity status (partnership) takes precedence. In this context, declarations of 4/1-a (SSK) status for a person reported as a paid employee from the joint-stock company they own are considered to have been made in error. The SGK premiums reported erroneously under 4/1-a must be transferred to the 4/1-b insurance status.

This legal prioritization of the 4/B status essentially aims to protect the legal system’s collection mechanism. While 4/A premiums are associated with employment and are easily monitored, 4/B premiums depend on the insured individual’s self-declaration and payment regularity. The law prioritizes the independent status (partnership) arising from the person’s actual activity, making it mandatory for the social security obligation to be fulfilled through the correct status.

2.2. Special Insurance Status of Village and Neighborhood Mukhtars

Special insurance conditions for village and neighborhood mukhtars are regulated by Law No. 2108. According to this regulation, mukhtars who are not affiliated with another social security institution or who are not receiving a pension/income from any institution are considered compulsory 4/B insured persons. The mukhtar’s insurance begins on the date they receive their certificate of election from the relevant election board, and this status must be reported to the SGK by the provincial or district civil authorities within 15 days.

Insurance of mukhtars is deemed to end one day before the date they start working under a service contract in the 4/A status. The right to buy back (borçlanma) mukhtar periods historically existed (under Law No. 1479), but this opportunity was abolished by Law No. 5754 as of May 8, 2008.

2.3. Suspension and Revival of Services (Ihya)

The services of 4/B insured persons who fail to pay their premiums are suspended by the SGK within the framework of legal regulations. This process is typically carried out with the termination code (76) as of the end of the month covered by the premium payments. Service suspension can be initiated upon the request of the insured person or after waiting for the legal periods (two or four months of payment duration).

Process by which the insured person or their beneficiaries pay a lump sum to revive (canlandırma) the suspended service periods, making them valid for retirement, is the ihya mechanism (4B Lump Sum Payment Revival).

The ihya mechanism plays a critical role, particularly in the context of impending major social security reforms. The 7200-day premium equalization arrangement expected for 2026 will create a significant opportunity for millions of tradesmen who suddenly reach the threshold for completing their premium days. However, a large portion of these tradesmen have suspended (revivable) services due to past debts. For insured persons who will qualify for retirement upon reviving their suspended Bağ-Kur services, the SGK’s credit agreements with institutions like Ziraat Bankası represent an important policy tool for financially managing the burden of revival. This financial support has the potential to maximize the social impact of the 2026 reform.

Part 3: Calculation of Bağ-Kur Premiums, Cost Analysis, and Incentives (2025 Data)

3.1. Premium Structure and 2025 Calculation Basis

The premium payable by 4/B insured persons is 34.5% of the declared earnings base (SPEK) determined by the insured person. This rate includes premiums for Disability, Old Age, and Death Insurance (MYÖ) and General Health Insurance (GSS). The minimum limit of the premium is calculated based on the gross minimum wage valid for that year.

The minimum monthly premium amounts payable by independent workers in 2025, based on the determined minimum wage data, are as follows:

2025 Gross Minimum Wage: 26,005.50 TL.
2025 Net Minimum Wage: 22,104.67 TL.

Non-Discounted Premium (Compulsory): Applying the 34.5% rate to the gross minimum wage: 26,005.50×0.345=8,971.62 TL.
Discounted Premium (with Regular Payment Incentive): Those who pay their premiums regularly and within the legal period benefit from a 5-point discount. In this case, the premium rate is 29.5%: 26,005.50×0.295=7,671.38 TL.

3.2. Premium Incentives and Cost Analysis

The primary incentive for 4/B insured persons is the 5-point discount applied when payments are made regularly. This discount is valid for all 4/B insured persons, excluding voluntary insured persons and mukhtars. For 2025, this discount amounts to 1,300.24 TL per month, significantly alleviating the financial burden on small tradesmen.

However, the fact that voluntary 4/B insured persons cannot benefit from this 5-point discount results in a higher premium cost for this group (typically those residing abroad or without compulsory employment) than for compulsory insured persons. This creates a financial deterrent for those who wish to voluntarily join the system.

Furthermore, the minimum premium reaching 7,671.38 TL in 2025 constitutes a serious mandatory monthly cost, especially for small tradesmen with low-profit margins. This high cost carries the risk of increasing the tendency to postpone premium payments (service suspension) or engage in unregistered work. The government’s goal of limiting the 7200-day equalization only to “small tradesmen” stems from the need to protect this segment against increasing cost pressures and to balance social policy objectives with financial sustainability.

For Agricultural Bağ-Kur insured persons, a different arrangement exists. Due to financial variations during harvest and sales periods, agricultural insured persons have the option to pay their premiums collectively in six-month periods. The deadline for the first six months’ premiums is July 31st of the relevant year, and the deadline for the second six months’ premiums is January 31st of the following year.

The table below summarizes the minimum Bağ-Kur premium costs for 2025:

2025 Bağ-Kur (4/B) Monthly Premium Cost Realization

Premium Item	2025 Gross Minimum Wage Basis (TL)	Rate (%)	Monthly Amount (TL)
Compulsory Premium (Non-Discounted)	26,005.50	34.5%	8,971.62
Minimum Premium (with Regular Payment Discount)	26,005.50	29.5%	7,671.38
Monthly Discount Amount	N/A	5.0%	1,300.24

Part 4: Pension Calculation Mechanisms and Actuarial Assessment

4.1. Three Distinct Periods in Pension Calculation

The calculation of the 4/B retirement pension is one of the most complex structures within the SGK system because the insured person’s premium payment periods are divided into three different legal and actuarial periods and calculated with a weighted average.

The main reason for this separation is that the laws in different periods (the repealed Bağ-Kur Law, Transition Provisions, and Law No. 5510) determined actuarial balances and pension connection rates differently.

Period	Basic Calculation Formula	Critical Actuarial Parameters
Pre-2000	Indicator Figure x Monthly Connection Rate (ABO) x Coefficient	Indicator Figure
2000 – 2008	Update Coefficient x ABO	Update Coefficient
Post-2008	Average Monthly Earnings x Connection Rate	Average Earning Base

Especially in the post-2008 period, the pension is directly dependent on the average declared earnings and the connection rate. This system ensures that tradesmen who pay higher premiums receive higher retirement pensions, while those who pay the minimum receive lower pensions.

4.2. Effect of Premium Regularity on Pension and Financial Polarization

Analyses show that irregular premium payments directly and negatively affect the pension amount for 4/B insured persons. The accumulation of premium debts and failure to revive them not only reduces the number of days required for retirement but also decreases the average earnings, thereby reducing the pension to be connected.

When examining average pension estimates for 2025, it is clear how financially polarized the 4/B status is :

Bağkur (4B) Average Pension: 15,500 – 60,000 TL.
SSK (4A) Average Pension: 16,000 – 50,000 TL.

The fact that the 4/B ceiling pension is higher than 4/A indicates that this system rewards high-earning independent workers. On the other hand, the 4/B floor pension (15,500 TL) being close to the 4/A floor proves that small tradesmen, especially those who pay minimum premiums and struggle to make a living, face similar financial difficulties in retirement. This extremely wide pension range reinforces the social justification for focusing the impending 7200-day reform solely on the minimum-paying segment.

The persistent effect of inflation on pension calculation must also be considered. Although post-2008 calculations aim to preserve real value with parameters such as the Update Coefficient and Average Earnings, the low performance of the Indicator system in pre-2000 calculations against inflation deepens the erosion of the purchasing power of 4/B beneficiaries who retired from this period.

Part 5: Financial and Legal Projections for 2025 and 2026

5.1. 2025 Cost Realizations and Administrative Discipline

2025 is a period where costs have been finalized and administrative obligations have been tightened for 4/B insured persons. The lowest mandatory monthly premium cost (with regular payment discount) for the first half of the year has materialized at 7,671.38 TL.

In addition to these financial obligations, administrative discipline is being increased in tax and reporting processes for independent workers. The significant increases in special non-compliance penalties for 2025 show that the sanctions that may be incurred for not meeting legal obligations on time and correctly have risen substantially for independent workers. This requires maximum diligence in financial and legal processes in 2025.

5.2. Economic and Premium Projections for 2026

To estimate the premium costs for 2026, current economic data and Medium-Term Program (OVP) targets have been taken as a basis. Based on the 2025 gross minimum wage of 26,005.50 TL, an estimated increase of 35% is projected in line with inflation and growth targets.

2025-2026 Bağ-Kur Premium Cost Projection

Item	2025 Realized (Gross Minimum Wage)	2026 Projected (Estimated 35% Increase)	2025 Min. Premium (Discounted)	2026 Min. Premium (Discounted, Projected)
Amount (TL)	26,005.50 TL	35,107.43 TL	7,671.38 TL	10,351.69 TL
Annual Total Cost	312,066.00 TL	421,289.16 TL	92,056.56 TL	124,220.28 TL

According to these projections, the lowest discounted monthly Bağ-Kur premium is expected to exceed 10,300 TL in 2026. This increase will further burden independent workers financially.

5.3. The Expected Major Reform: 7200-Day Premium Equalization

The most critical legal change on the government’s agenda is the arrangement to reduce the premium day requirement for 4/B insured persons from 9,000 days to 7,200 days. This equalization aims to address the injustice caused by the difference in premium days between SSK (4/A) and 4/B insured persons and offer tradesmen the opportunity to retire approximately 5 years earlier.

Legal Scope and Timeline

The work for the regulation has been completed, and it is anticipated that it will be included in the omnibus bill expected to be submitted to the Grand National Assembly of Turkey (TBMM) in the first quarter of 2026.

However, the scope of this reform has been limited to control financial liabilities. This regulation will not cover all 4/B insured persons, but will target only the group defined as “small tradesmen.” Research indicates that this definition will cover small-scale businesses, such as barbers or grocers, who employ fewer than 10-15 personnel.

While the reform will reduce the number of premium days, it will not change the age requirement for retirement.Therefore, Bağ-Kur insured women who complete 7,200 premium days will be able to retire at age 58, and men at age 60. This restriction aims to prevent the arrangement from creating a widespread effect similar to the EYT (Early Retirement Law).

Legal Uncertainty and Risk Management

The expectation that the regulation will be enacted in the first quarter of 2026 may lead to changes in the premium payment behavior of tradesmen. Specifically, many tradesmen waiting for the regulation to become law may postpone their 2025 premium payments and prepare for a lump-sum payment using the ihya mechanism. This poses a risk of a short-term decrease in SGK’s premium collections, while triggering a large flow of revival and lump-sum premium payments upon the passage of the law.

Furthermore, if the definition of “small tradesmen” is not determined with clear and measurable criteria (e.g., number of employees, turnover, or tax liability type) in the draft law, legal disputes and demands for equality through the judicial system are expected to increase among 4/B insured persons excluded from the scope. The government’s tendency to narrow the definition to control the financial burden carries these legal risks.

Key Parameters of the Foreseen 7200-Day Premium Equalization Arrangement (2026)

Parameter	Current Status (General 4/B)	Foreseen Arrangement (Small Tradesmen)	Legal Impact	Estimated Legislative Timeline
Required Premium Day	9000 Days (25 Years)	7200 Days (20 Years)	5 years earlier retirement	2026 Q1 TBMM
Covered Audience	All Independent Workers	Limited tradesmen based on employee count or scale	Scope is narrowed to control financial burden	N/A
Age Requirement Change	None	None (58/60 Age Continues)	Prevents an EYT-like outcome	N/A

Conclusion and Evaluation

The Bağ-Kur (4/B) social security system, despite historically securing a large population of independent workers, continues to grapple with structural issues such as high cost pressures, complex pension calculation mechanisms, and premium day inequality. Rise of minimum premium costs to 7,671 TL in 2025 increases the financial pressure on small tradesmen, supporting the tendency towards unregistered or indebted work.

The 7200-day premium equalization reform expected in the first quarter of 2026 will offer a significant benefit to the targeted small tradesmen segment by providing the opportunity for 5 years earlier retirement. However, the limitation of this regulation’s scope, not covering all 4/B insured persons, will not completely eliminate the perception of inequality among the general population regarding insurance statuses.

From an actuarial perspective, the extreme financial polarization in 4/B pensions (15,500 TL – 60,000 TL) demonstrates the necessity for policymakers to direct subsidies toward a narrow target audience, as this status encompasses varying income levels.

Key Recommendations for Insured Persons:

Financial Discipline: It is crucial to pay premiums regularly within the legal period to benefit from the compulsory premium payment discount (5-point).

Financial Planning: It is critical for insured persons with suspended Bağ-Kur services to foresee the costs of revival (ihya) in line with the 2026 reform timeline and plan financial resources (including credit) to utilize the right to revival. For tradesmen completing the 7200-day threshold, settling past debts through revival will be a prerequisite for benefiting from the early retirement opportunity provided by the reform.

Tracking Legal Scope: The clarification of the “small tradesmen” definition and the legal consequences of this definition during the legislation process of the 7200-day arrangement should be closely monitored to prevent potential grievances.

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