Of the 18 existing retirement funds in Iran, including basic social pension funds, 17 are in the red.
Economist Saeed Laylaz, in a controversial article, said the Islamic Republic’s pension systems would face a serious crisis, and that if the government did not resolve the issue, the economy could crumble, according to a report on Radio Zamaneh.
The average pension support ratio in Iran was 25 in 1974, that is, for every 25 employees, there was one retiree, but by 2016, it fell to 5.29. This means that only 5.29 workers then paid contributions to support one pensioner, while at least 6.37 workers per pensioner were needed to ensure that retirement funds did not enter into deficit.
According to the latest official statistics, the support ratio for the Social Security Organisation is 1.6; the state pension fund 0.91; the social insurance fund for farmers, villagers and nomads 1.29, with several other funds also reporting similar low support ratios.
Currently, there are several retirement funds with imbalances. For example:
- The steel workers’ pension fund has only 11,600 contributors, but pays benefits to more than 74,000 pensioners;
- The Pension Fund of the Ports and Maritime Organisation has 1,300 subscribers, but pays out to 2,100 retirees; and
- The Central Bank’s insurance fund has 20,400 contributors, but pays out benefits to more than 33,000.
Among the factors that contribute to the pension fund deficits are: unemployment, early retirement, the economic recession and the ageing of the working population in Iran.
About 9.2%, or 7.5 million, of the 80 million people in Iran are senior citizens, according to the Iranian Statistics Centre. Demographic experts predict that by 2020, the elderly will reach 10% of the population, and by 2050, 30%.
To address the pension crisis, the Ministry of Labour and Social Welfare recently invited international experts to examine the issues and provide solutions.
One proposal that has emerged is to merge the various pension funds and to cut pension benefits. M