Title: Landmark Pension Reform Approved by Cabinet to Boost Retiree Incomes and Fund Stability
In a significant move to enhance social welfare, the Iranian government has approved a pivotal bill designed to substantially increase pension payouts and fortify the nation’s retirement funds.
Closing the Income Gap for Retirees
The Vice President and Head of the Administrative and Employment Organization announced that a new bill has been passed by the cabinet, marking a major step towards ensuring that retirees’ incomes are brought closer to what they earned during their active careers. This initiative directly addresses a key concern for public sector employees transitioning into retirement.
Expanding the Pension Calculation Base
The core of this reform lies in the expansion of the items subject to pension deductions. Previously, various allowances and bonuses were excluded from this calculation, leading to a significant drop in income upon retirement. The newly approved bill mandates that the following will now be included in the pension base:
- Allowances for underdeveloped and harsh-climate regions
- Overtime pay
- Non-mandatory teaching fees for educators and faculty members
- Shift differential pay
- A portion of employee welfare payments
A Dual-Purpose Strategy for Long-Term Stability
Alaeddin Rafiezadeh, the official who announced the approval, stated that the amendment to Article 106 of the Country’s Civil Services Management Law was developed with two primary objectives.
Firstly, it aims to prevent a sharp decline in employees’ income after retirement, thereby improving the living standards for pensioners. Secondly, it is a strategic measure to strengthen the financial resources of the national pension funds, ensuring their sustainability for future generations.
Rafiezadeh emphasized that this legislative action will not only narrow the income gap between active workers and retirees but also create a more harmonious and stable pension system. By aligning the deduction rules for civil servants with those in the labor law, the reform reduces the need for parallel support legislation and guarantees the long-term health of the retirement funds. The bill now awaits final ratification by the Islamic Consultative Assembly (Majlis).