Iranian Government Approves Comprehensive Pension Equalization Plan for Oil Sector Retirees
In a significant move aimed at addressing economic pressures on its retired community, the Iranian government has finalized and announced a new, detailed formula for pension equalization. This long-anticipated plan is designed to bridge the income gap between retirees and their currently employed counterparts, ensuring a more equitable and dignified standard of living for those who have served the nation.
A Formula for Fairness
The newly approved formula is the result of extensive expert review over the past months. Its primary objective is to establish wage justice and reduce the disparity in earnings between retirees and active employees of equivalent rank and experience. The core components of the calculation include:
- The average salary of an equivalent active employee over the last two years.
- The retiree’s percentage of service history.
- An annual adjustment coefficient.
- Continuous benefits.
The overarching calculation is: New Pension = (Average Equivalent Colleague’s Salary × Service History Percentage) + Adjustment Coefficient + Continuous Benefits.
Key Features and Implementation
This reform is characterized by its individualized approach. Each retiree’s new pension will be calculated based on their specific service record, job rank, and benefits. A central tenet of the plan is that no retiree will see a reduction in their current payments; the adjustments are solely for the purpose of increases.
Who is Covered?
The plan encompasses all pensioners and beneficiaries under the oil industry retirement funds, including:
- Official retirees of the Ministry of Petroleum.
- Retirees from the National Iranian Oil, Gas, Refining, and Distribution Companies, and Petrochemical Industries.
- Eligible survivors (spouses and dependent children of deceased pensioners).
- Individuals with total or partial disabilities covered by oil employment laws.
Adjustment coefficients will be tailored to each group based on the type of retirement and service conditions.
Estimated Increases and Timeline
The pension increase is directly tied to the retiree’s length of service and job grade. Projected increases are as follows:
- Less than 20 years of service: 10% to 15% increase (approximately 2 to 3 million Tomans monthly).
- 20 to 25 years of service: 15% to 20% increase (approximately 3 to 4 million Tomans monthly).
- 25 to 30 years of service: 20% to 25% increase (approximately 4 to 5 million Tomans monthly).
- Over 30 years of service: Up to a 30% increase (over 5 million Tomans monthly).
The plan is scheduled for official implementation starting in the Iranian month of Mehr (late September 2024). The new payment rates will be reflected in pension slips by Aban (late October), with any arrears for the first two months paid in Azar (late November). The new pension decrees will be published digitally on the retirement fund’s portal, allowing retirees to review the details and file inquiries if discrepancies are found.