6 months ago
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A worsening crisis of insolvency in Iran's social security system and pension funds, poses an additional threat to the unpopular establishment in Iran.
The reports and videos sent to Iran International demonstrate that retirees in different provinces such as the oil-rich Khuzestan, Kermanshah and Kordestan have launched rallies over the recent days to voice their discontent about the government’s economic policies. The protests are expected to continue as pension funds in Iran are experiencing a full-fledged financial crisis.
Shargh newspaper in Tehran provided coverage from a gathering of economic experts who discussed the issue, highlighting the challenges faced by Iran's pension funds, with many receiving no funding at present. The government's debts to Iran's Social Security Organization are steadily increasing, leading to concerns that the government might need to transfer the entire oil industry to the Social Security Organization to settle its debts.
Iran’s pension funds find themselves in an unfavorable situation with many of them receiving zero input at the present, Shargh quoted a former director of Iran’s Social Security Organization Mehdi Karabasian as saying.
Hossein Abdoh, economist and former Secretary General of Tehran Stock Exchange, also pointed out that the Iranian government does not fully comprehend the imminent crisis of the pension funds.
He noted that the government’s debts to Iran’s Social Security Organization are increasing steadily.
“It seems that one day the government will have to give the whole oil industry to the Social Security Organization to settle its debts,” Abdoh warned.
Iran has faced a serious economic crisis since the United States withdrew from the JCPOA nuclear accord in 208 and imposed oil and banking sanctions. Its failure to reach a new agreement under the Biden administration has gradually drained government finances and rounds of serious anti-regime protests have taken place.
Iran’s Social Security Organization is a public institution that provides health insurance, pension and unemployment benefits to its members. They range from workers and government employees to self-employed individuals. According to official statistics, 53 percent of the Iranian population receive some type of benefit from the organization.
On October 24, Moslem Salehi, a member of the Economic Commission of Iran's parliament, said in an interview with Tasnim news agency that all pension funds, “except two or three,” have gone bankrupt.
Without the government’s assistance, these funds will not be able to meet the needs of the retirees, he stipulated. However, the issue is not limited emergency funding, but the underlying factor of a weak economy, mismanagement, corruption, and a huge government budget deficit.
According to Shargh, in the current budget, $6.62 billion of public expenditures has been allocated to pension funds. This is while the government still owes $3.4 billion to the pension funds.
Experts have warned against the policy of funding pension funds via annual budgets, saying that this will result in unfortunate consequences in the future.
In May 2023, the then-director general of social insurance in Iran’s Ministry of Labor, Sajjad Badamforoush said that even if the government sells the two southern islands of Kish and Qeshm and Khuzestan province, it will not be able to pay pensioners' arrears.
He was fired a few days after these remarks.
Earlier in the year, a report in Rouydad24 also pointed out that the crisis concerning the pension funds will paralyze Iran and will plunge its economy into a new crisis in less than two decades.
Touching upon the critical condition of the pension funds, Hossein Amerian, general director of steel industry pension fund, revealed in April 2023 that around $400 million was lost either through mismanagement or embezzlement.
There are 800 investigations taking place to identify all those who are responsible for the losses, he added.
In May 2023, Rahim Mombeini, the deputy head of Iran’s Planning and Budget Organization, announced that President Ebrahim Raisi’s administration faces a huge budget deficit this year.
According to Mombeini, the amount of the Iranian government internal debts has increased about 900-fold over the past decade to $60 billion. This amount of debt, which is equivalent to 31% of the GDP, includes government debts to banks, the Central Bank of Iran, pension and social security funds, public and private sector contractors, and bonds that have been issued in previous years.
