Iranian Government Approves Landmark Bill to Harmonize and Boost Pension Benefits
In a significant move to enhance social welfare and ensure long-term financial stability, the Iranian government has approved a new bill aimed at reforming the pension system for civil servants.
Addressing the Pension Gap
The newly approved bill amends Article 106 of the State Management Services Law. Its primary objective is to prevent a substantial drop in income for employees upon retirement, a common issue that has affected the livelihoods of retirees. Furthermore, the legislation is designed to strengthen the financial resources of the nation’s pension funds.
Key Provisions of the Reform
Under the new provisions, a wider range of earnings will now be subject to pension deductions during an employee’s active service. These include allowances for working in underdeveloped regions, overtime pay, non-mandatory teaching allowances for educators and faculty members, shift differentials, and a portion of welfare benefits.
This change is critical because, under the current system, many of these variable payments are not factored into pension calculations, leading to a significant disparity between an employee’s final salary and their subsequent pension.
Ensuring Stability and Fairness
The reform is expected to yield two major benefits. Firstly, it will substantially reduce the income gap between active employees and retirees, ensuring a more stable and dignified post-career life. Secondly, by broadening the contribution base, it will create a more robust and sustainable financial foundation for the pension funds themselves.
Commenting on the legislation, Mr. Rafiezadeh, the Vice President, emphasized that the bill brings the pension calculation rules for civil servants in line with those for employees under the Labor Law. He stated that this harmonization “guarantees the long-term sustainability of pension funds” and reduces the need for separate protective laws.
The bill, which was approved by the cabinet, will now be forwarded to the Islamic Consultative Assembly (Parliament) for final ratification.
