Retirement funds have become a secluded courtyard for the children of Iran’s government officials, known among Iranians as “Aghazadeh”, who, along with the regime’s corrupt apparatus, have directed the regime into dangerous waters.
The retirement fund crisis in Iran has been an ongoing issue that many experts consider to be the regime’s biggest economic challenge in the near future. Recently, this crisis has once again made headlines in Iranian state media, and Sajjad Padam, the Director-General of Social Security Insurance at the Ministry of Welfare, has become the regime’s fallout guy of this chaotic situation. In a strange statement, he announced the sale of Kish and Qeshm islands and even Khuzestan province to address the retirement fund crisis. Although Padam claimed his statements were taken out of context, it still rendered his dismissal.
This is not the first time that Iran’s retirement fund crisis has been brought up. The history of this crisis, or perhaps its media coverage, dates back to the Hassan Rouhani administration and Ali Rabiei serving as the regime’s Minister of Cooperatives, Labor, and Social Welfare.
In 2018, Ahmad Meidari, then Deputy Minister of Social Welfare, said the government’s debt to these funds stood at 1,700 trillion rials (approximately $16.19 billion at that time). “If we don’t think of a solution for the retirement funds, we will face a critical situation in the near future,” Meidari said.
Although it seems that this crisis has been an economic challenge, it remains quite sensitive and closely knit to security matters. The news and remarks by officials and experts about this economic dilemma show the depth of this catastrophe before Tehran’s rulers.
Rabiei had warned about this issue on numerous occasions. In 2016, he raised the issue of corruption in these funds and questioned their profitability.
The retirement fund crisis in Iran has been an ongoing issue that has not been addressed adequately. The challenge has significant economic and security implications.
In an open-doors session of the regime’s Majlis (parliament) in January, the current Minister of Labor, Sowlat Mortazavi, acknowledged the existence of a serious crisis in Iran’s social security system. He warned that if the regime continues with its current policies, by the year 2026 there will be a deficit of resources in both the Social Security Fund and the National Pensions Fund.
Masoud Nili, an economist close to the regime in Iran, recently pointed out that the lack of administrative and political independence of these funds is a major problem. When the government faces a budget deficit, it turns to the pension funds for support, creating a debt that threatens the funds’ stability.
Retirement funds on the verge of bankruptcy
According to the latest statistics, the Social Security Organization, which covers around 15.5 million workers paying insurance, pays pensions to about 4.3 million retirees each year. The National Pension Fund, as the second largest pension fund in Iran, covers about 880,000 insured workers and pays pensions to 1.63 million retirees. The imbalance between the number of pensioners and contributors, along with corruption and mismanagement, has put the pension funds at serious risk of bankruptcy.
Moreover, corruption is rife within these funds in Iran. The funds have become increasingly dependent on government resources and the general budget. These pension funds were supposed to be financially independent and have their own policies, but they have turned into some of the government’s largest financial dependents. The hasty and improper privatization of some companies, transferring them to pension funds in exchange for government debt, and appointing unqualified managers with ties to certain elites have created serious problems for the funds. The former CEO of the country’s Steel Pension Fund revealed that due to mismanagement, the fund had accumulated 800 legal cases worth 100 trillion rials (approximately $192 million), with the involvement of some well-known figures, former minister’s children, and elites.
The problem of corruption in the pension funds is not limited to Iran’s appointment of certain individuals, but also includes exorbitant salaries and bonuses. In an interview, Sowlat Mortazavi said that some individuals in the pension funds receive monthly gifts of 500 to 1000 million rials ($1,000 to $2,000), in addition to their monthly salaries of 200 million rials ($400).
The roots of Iran’s pension fund crisis cannot be solved by simply changing officials. This challenge poses a serious threat to the regime’s security. The corrupt structure of these funds and weak management apparatus, along with increasing debt, cannot be easily resolved. The pension funds have become a safe haven for some elites and have reached a critical point that requires urgent attention.
On the other hand, we see that pensioners across Iran are protesting on a daily basis for their rights.
Protests are continuing in Iran as the country’s economy continues to experience further crises as a result of the mullahs’ destructive policies. More retirees are taking to the streets as they are finding it extremely difficult to make ends meet, especially as the national currency, the rial, has plunged in value against the U.S. dollar.
Regime officials refrain from addressing the pensioners’ demands. The protesters complain that their meager pensions are not nearly enough to cover their most basic expenses and are often delayed for several months.
Pensions and salaries have not been adjusted to this fundamental shift in the Iranian society’s economic dynamics. Under the current rates, most pensioners are living under the regime’s own poverty line.