TURKEY – Turkish president Ahmet Necdet Sezer has vetoed the pensions and health insurance reform bill, according to a news agency report.

Reuters cited a statement from the president's office as saying the measure – backed by the International Monetary Fund - was vetoed as it cut already low pensions and because the proposed new retirement age of 65 was too high.

The bill was part of a set of measures designed to revamp the country’s social security system. The IMF had wanted parliament to pass it before it carries out a review to release the next tranche of a $10bn loan.

"If it is considered that the present pensions are far from providing a minimum standard of living worthy of human dignity, then it is obvious that the new rule which lowers these payments is not fair, reasonable and moderate," the report quoted the statement as saying.

The move comes amid what officials have termed an “exponential growth” in pension assets.

Just last month it appeared that the politically sensitive social security bill would get the nod.

The Financial Times had said analysts reckon the bill was among the most important any Turkish government has passed - including the abolition of the death penalty.

Last month consulting firm Hewitt Associates confirmed it plans to officially open an office in Istanbul in the summer.