Title: Government Approves Pension Increase for Retirees, Aims to Bridge Income Gap
In a significant move to support retirees, the Iranian government has confirmed a proposal to increase pensions for the second half of the current year. The decision, which has been approved by the Human Capital Management Commission, is now awaiting final ratification by the Council of Ministers.
Pension Boost Awaits Final Government Approval
Alaeddin Rafiezadeh, head of the country’s Administrative and Recruitment Organization, announced the development. He emphasized that the primary goal of this measure is to improve the livelihood of retirees by narrowing the income gap between current workers and pensioners.
“Upon final approval by the Council of Ministers, the pension increase will be implemented, bringing retirees’ income closer to a higher standard,” Rafiezadeh stated. He added that the initiative is designed to directly enhance the welfare of retirees in the latter half of the year.
Implementation Timeline and Financial Considerations
The proposal is currently on the agenda of the Council of Ministers. If approved and upon the securing of necessary financial resources, the increased payments are expected to take effect from the autumn or winter of 2024. There is also the possibility of retroactive payments to cover the difference for previous months.
Analysts suggest that, given public sentiment and the government’s emphasis on social justice, the likelihood of this increase being implemented is high. However, its finalization is contingent upon the decision of the Council of Ministers and the financial capacity of the Plan and Budget Organization.
Addressing Structural Challenges in the Social Security System
The news of the pension increase comes alongside ongoing discussions about the long-term financial health of the Social Security Organization. In a recent address, Mostafa Salari, the Managing Director of the Social Security Organization, provided a detailed overview of the systemic challenges facing the fund.
Salari warned that the fund has significant monthly commitments, stating, “We currently have monthly payment obligations of 125 trillion tomans. Approximately 100 trillion tomans of this is for the pensions of 1.8 million retirees, and another 25 trillion is allocated for the healthcare of 48 million insured individuals. Failure to meet these payments would disrupt the lives of millions.”
He identified several structural issues, including early retirement laws and what he termed “unrealistic wages,” where pensions are calculated based on a worker’s highest earning years rather than their lifetime average contributions. “These decisions are the product of hasty policies from past decades, and the consequences now burden the fund, disrupting the balance between its resources and expenditures,” Salari explained.
A Call for Collective Action and Reform
Salari stressed that the current challenges are not the fault of any single individual or institution but are the result of complex factors, including legislative and executive decisions. He called for unified national effort to navigate these challenges, warning that the stability of the Social Security fund is intrinsically linked to the country’s overall economic health.
He also outlined proposed legal reforms aimed at creating a more sustainable system based on fairness and collective wisdom. “If a collective decision is not made and the fund continues to be managed under flawed laws, the fate of social security and, consequently, a significant part of the country will face a serious threat,” Salari concluded, underscoring the critical need for systemic reform to ensure the fund’s viability for future generations.
