July 19, 2019
Iran’s Social Security Organization, which provides pensions to private sector workers, is paying out far more than it has in hand and has been borrowing from banks to make its monthly pension payments. Now it is inundated with debt.
The Social Security Organization owes 400 trillion rials ($2.58 billion) to banks, according to the group’s deputy for economic and planning affairs, Hossain Amiri.
He said the organization borrowed 50 trillion rials ($323 million) monthly from banks in the last Persian year, the business website IBENA reported.
Its pension obligations have risen by 36 percent this year, so it is now facing even greater challenges in meeting its financial commitments.
The rising number of retirees and the shrinking returns from investments are forcing the organization to sell its assets to keep up with the rising pensions.
During the tenure of President Mahmud Ahmadi-nejad, his administration forced the SSO to “buy” state firms supposedly being privatized. The SSO paid for the firms with the IOUs Ahmadi-nejad had given to it as the government forcibly “borrowed” its capital assets for its spending programs.
The SSO is a joint venture of three parties: the government, workers and employers. The trilateral agreement is supposed to ensure the retirement of workers. But, in recent years, the organization has been facing an uphill task as an increasing number of people retire every year while new jobs are few and far between. The result is that the income (insurance premiums) of the SSO has shrunk every year while its expenses keep rising.
It remains to be seen how long the SSO can survive.