Iran Unveils New Pension Adjustment System to Enhance Social Welfare
In a significant move aimed at bolstering social welfare, Iranian authorities have announced the details of a new pension calculation and adjustment system. The plan, designed to increase the satisfaction and economic well-being of retirees and pensioners in the coming years, represents a key policy initiative in the nation’s socio-economic landscape.
A Focus on Pension Justice
Pension adjustment is a cornerstone of social and economic welfare policy. This newly detailed program has been implemented to counter the devaluation of pension incomes and to increase fairness in payments, holding particular importance for Iran’s retiree community.
The Legal Framework
Banafsheh Mahmoudian, Director General of Pensions at the Social Security Organization, outlined the legal basis for the adjustments in a statement to ISNA news agency. She cited specific legal provisions, including Article 2 of the executive bylaw for pension adjustment and section (R) of Article 28 of the Seventh Development Plan law. According to these statutes, pension funds are mandated to adjust the pensions of their beneficiaries within the framework of approved credits.
The law further obligates the Social Security Organization to compensate for 90% of the gap between the pension coefficient and the minimum wage at the time the pension was established by the end of the third year of the Seventh Development Plan’s implementation.
A Three-Phase Implementation Plan
Mahmoudian detailed that the calculation and increase of pensions for the current Iranian year (1404) will be executed in three essential phases:
- Phase One: Application of the annual pension increase for the previous year (1403).
- Phase Two: Application of the pension adjustment amount for the previous year (1403).
- Phase Three: Determination of the pension adjustment amount for the current year (1404).
The New Calculation Structure
The new computational structure applies a two-tiered approach:
- For minimum-wage pensioners: The pension amount from 1403 is multiplied by 1.45.
- For other pension levels: The pension amount from 1403 is multiplied by 1.32, and then 9,316,500 Rials is added.
Rising Costs of Welfare
A review of the costs associated with implementing the pension adjustment plan highlights a significant increase in recent expenditures:
| Year | Monthly Adjustment Cost |
|---|---|
| 1403 | 2,200 Billion Tomans |
| 1404 | 3,200 Billion Tomans |
| Current Year | 5,500 Billion Tomans |
Analysis: Sustainable Financing is Key
With the substantial rise in adjustment costs, securing the necessary financial resources is a fundamental challenge for the Social Security Organization. The effective design of policies by officials for managing financial resources and optimizing costs is essential for the program’s long-term success.
Proper execution of these policies is expected to improve the economic conditions of retirees and help prevent a widening class disparity in pension incomes. The pension adjustment program is an effective measure in support of this segment of society, though its success hinges on sustainable financing and precise management of economic resources.
