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Report: Iran’s Social Security Organization At The Brink Of Bankruptcy

Retired people demonstrating in Tehran. They demand higher retirement checks as the Iranian currency has steadily lost its value. File photo

A report published by the Iranian Parliament’s Research Center says that the country's Social Security Organization is facing a serious risk of bankruptcy.

“The likelihood of a financial insolvency of the Social Security Organization in the next decade is very high”, the report warns and adds that the dimension of the crisis will be so huge that the government would not be able to control it.

Considering the nationwide coverage provided by the Social Security Organization and the diversity of the beneficiaries, its possible bankruptcy could result in widespread economic and social unrest in the country, the report reads.

Iran’s Social Security Organization is a public institution that operates independently and provides health insurance, pension and unemployment benefits to its members. They range from workers and government employees to self-employed individuals. More than 42 million Iranians (ca. 52% of the population) receive some type of benefit from the organization.

According to Iranian Parliament’s Research Center, a rapid increase in the number of beneficiaries, due to an aging population, low birth rates, increasing costs of health-care services, budget deficit, mismanagement, government’s interference, and government’s failure to meet its financial obligations are the major factors responsible for the crisis that the Social Security Organization is facing.

The Organization also owns dozens of companies that are not profitable and its former head was convicted of corruption charges in 2016.

On Monday, Members of the Iranian parliament warned about the possible bankruptcy of the Social Security Organization and urged the government to start paying its massive debt to the fund. A high-ranking official of the Social Security Organization announced recently that its uncollected receivables is more than $36 billion. Most of this is due to delayed government contributions to the fund and accumulated interest. However, the Parliament’s Research Center estimated the this amount to be $29 billion.

In order to solve its financial problems temporarily, the Social Security Organization has been borrowing money from banks.

According to the report, the organization’s debt to banks subsequently has jumped from less than $1 million in 2011 to more than $2 billion last year, making the Social Security Organization a “super borrower”.

The organization’s spending during last year has also exceeded $2 billion, 15% more than its income.

If the current trend continues, within 8 years its budget deficit will reach $27 billion, the report says.