Iran Approves Social Security Pension Increase, Aims to Bridge Gap with Active Workers
In a significant move for social welfare, a proposal to increase pensions for Social Security Organization (SSO) retirees has been approved by the relevant commission and is now awaiting final ratification by the government cabinet.
Key Decision for Retirees
Alaeddin Rafiezadeh, Head of the State Administrative and Recruitment Organization, announced that the proposal was approved in a recent meeting of the Human Capital Management Commission. The primary objective of the increase is to bring the income of pensioners closer to that of active workers, enhancing their financial stability.
Rafiezadeh emphasized, “Upon final approval by the cabinet, the pension increase will be implemented.” The commission also put forward two other proposals concerning the reorganization of corporate contract workers, which also require cabinet approval to take effect.
Underlying Financial Challenges
While the planned increase is positive news for beneficiaries, it comes against a backdrop of significant financial pressures on the Social Security fund. In a separate address at a conference, Mostafa Salari, the Managing Director of the SSO, provided a detailed and sobering assessment of the organization’s fiscal health.
Salari warned that the fund faces a severe structural challenge, citing “hasty laws and non-expert decisions” from past decades as the root cause. He revealed that the SSO has a massive monthly commitment of 1,250 trillion tomans ($25 billion approx.), which covers pensions for 1.8 million retirees and healthcare for 48 million insured citizens.
“The failure to make these payments would disrupt the lives of millions,” Salari stated, underscoring the fund’s critical role in the nation’s social fabric.
A Call for Systemic Reform
The Managing Director pinpointed several specific policies that have strained the fund’s resources:
- Early Retirement: Noting that Iran is the only country where one can retire at age 35, he highlighted that 52% of current retirements are classified under “hazardous and arduous” professions—a rate unmatched anywhere else in the world.
- Unrealistic Wages: A practice where a worker’s insurance is based on a modest salary for years but suddenly spikes in their final two years of employment, leading to a disproportionately high pension calculation. Salari noted this alone damages the fund’s resources by 30% each month.
These practices have created a persistent monthly deficit of approximately 25 trillion tomans, forcing the organization to impose stricter measures on workers and employers to meet its unwavering obligation to pensioners.
Salari was clear that this is a systemic issue, stating, “This crisis is not the product of one person or one entity’s performance. We are all to blame; from incorrect legislation to flawed implementation and social pressures.” He positioned the SSO not as a charitable entity but as a trusteeship fund, arguing that if lawmakers extend coverage to groups without requiring insurance premiums, the government must cover the cost from tax revenues, not from the existing fund.
The Path Forward
Concluding on a note of urgent collaboration, Salari presented five proposed legal amendments designed to address these structural problems based on “fairness, reason, and collective wisdom.” He issued a firm warning: “If a collective decision is not made and the fund continues to be managed by flawed laws, the fate of social security, and consequently a significant part of the country, will face a serious threat.” The call is for comprehensive reform to ensure the long-term sustainability of this vital national institution.
