Most of Iran’s retirement funds are facing financial trouble and rely on heavy subsidies from the government, Iranian Vice President Eshaq Jahangiri says.
"The problem of pension funds is going to be a serious challenge in the future," Jahangiri said October 23 addressing the 2018 Regional Conference on Population Aging. Jahangiri said 70-80 percent of Iran’s retirement funds and 100 percent of the armed forces pension funds are paid by the government.
Iranian state employees and the armed forces have their own pension funds, while a bigger pension fund run by the Labor Ministry covers all other workers. State employees include not only civil servants, but also employees of companies where the majority stake holder is the state.
Jahangiri's warning comes at a time when Iranian retirees have been demanding the government address their economic hardships by staging protest rallies across the country.
SEE ALSO: Retirees Come Out To Protest Meager Pensions In IranRecently, thousands of public service retirees assembled outside the Planning and Budget Organization offices in Tehran and other large cities to protest their low pensions. Protesters say the pensions they receive are below the poverty line set by the government.
All pension funds are insolvent, mainly because successive governments have not contributed adequately or have mismanaged the funds. The biggest irregularities happened during the presidency of Mahmoud Ahmadinejad, when political appointees were put in charge of financial institutions.
“Currently, the number of senior citizens stands at 7.4 million in Iran, and that number is projected to increase to 30 million by 2050,” Jahangiri said. “This is something new for Iran, which has never experienced such a large senior population.”
The purchasing power of retirees has declined sharply in recent years, as inflations and the depreciation of the local currency has made essential goods and services much more expensive.
Furthermore, state-run Iran Labor News Agency (ILNA) reports that Iran’s Social Security Organization (ISSO) is "suffering from unstable financial sources" and, as "Iran's largest pension fund, is deteriorating.”
A labor representative to ISSO's board of trustees, Akbar Shokat, has also referred to what he described as "senility" of retirement funds across Iran, insisting that misguided policies have directed ISSO toward insolvency.
Such an eventuality would be catastrophic as the fund covers millions of individuals across Iran.
Currently, the Iranian government's debt to ISSO is more than 180 trillion tomans (roughly $40 billion), and it will pass the 200,000 billion tomans mark before the end of the Iranian calendar year March 20, Shokat says. Furthermore, ISSO is absorbing deep losses of up to 10 million tomans for healthcare expenses. The additional burden, according to Shokat, has deepened the crisis and the negative effects will soon be felt by all retired Iranians.