Major Pension Reform Underway: Multi-Year Plan to Boost Retiree Incomes by 90%
In a significant social welfare initiative, Iran has been implementing a comprehensive pension adjustment law designed to substantially increase the incomes of the nation’s retirees. The multi-year plan, a key policy focus, aims to address the critical need to bridge the gap between pensioners’ fixed incomes and the rising cost of living.
A Phased Approach to Financial Support
The implementation of the pension adjustment law began in Aban 1403 (October/November 2024) under the management of the Social Security Organization. To date, the program has already benefited over 4.7 million pensioners. The law mandates a three-year, phased rollout with a clear objective: to compensate for 90% of the disparity between pension coefficients and the current minimum wage by the end of the third year.
The increases are structured to provide significant relief at each stage. The first year saw a 40% adjustment, followed by a 30% increase in the second year. A final 30% adjustment is planned for the third year, culminating in the total 90% boost to pension values.
Substantial Investment and Individualized Calculations
This vital support for elderly citizens represents a major financial commitment. According to Banafsheh Mahmoudian, Director General of Social Security Pensions, the organization incurs a monthly cost of approximately 5,500 billion tomans to fund the current year’s adjustments.
A key aspect of the reform is that the increase is not a flat rate for all recipients. The adjustment is calculated individually for each pensioner based on their specific insurance records and existing pension amount, ensuring the process is equitable and follows precise actuarial principles.
Addressing a Vital National Need
The necessity of this law is clear. For many of Iran’s elderly, who are often over 60 years of age and may be unable to re-enter the workforce due to age or illness, their pensions were insufficient to cover basic living expenses. This adjustment provides crucial assistance with household expenses for this important segment of society.
The Social Security Organization, which provides services for roughly 60% of the country’s estimated 8 million retirees and pensioners, treats the execution of this adjustment as a mandated duty. The legal basis for the reform is firmly established, being outlined in both the executive bylaw of the pension adjustment law and Article 28 of the country’s Seventh Development Plan.
With the first two years of increases already successfully distributed—including the settlement of arrears from the previous year—the program remains on track to fulfill its three-year commitment to Iran’s retired community.