Pension Fund Crisis In Iran Can Lead To More Political Instability
A worsening crisis of insolvency in Iran's social security system and pension funds, poses an additional threat to the unpopular establishment in Iran.
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.
During a Wednesday press conference, US President Joe Biden warned Iran against further attacks on US troops in the region after rising incidents in the last week. “My warning to the Ayatollah was that if they continue to move against those troops, we will respond, and he should be prepared,” he warned.
Since Iran-backed Hamas declared war on Israel on October 7, killing more than 1,400 and taking at least 220 hostages back into Gaza, Tehran's other proxy militias have intensified attacks on bases hosting American troops deployed in the region since 9/11. Hezbollah has increased its attacks on Israel’s northern border while proxies in Yemen and Syria have also fired missiles towards Israel.
At least 24 US troops have been injured during 10 drone or rocket attacks on bases in Iraq and three in Syria over the past week.
Biden said his warning to Iran “has nothing to do with Israel,” but it echoes similar statements by Washington that on several occasions warned Tehran to “be careful” not to do anything that leads to expanding the conflict into a larger Middle East war.
The US embassy in Kuwait has also received threats from an Iranian proxy, and downgraded all its operations to those which are deemed essential.
The political deputy in Iran’s presidential office, Mohammad Jamshidi, said in what IRGC-affiliated Tasnim news agency described as a reaction to Biden’s remarks, “The US messages were neither directed to the leader of the Islamic Revolution nor were they anything but requests from the Iranian side. If Biden thinks he has warned Iran, he should ask his team to show him the text of the messages.”
Earlier in the week, Iranian Foreign Minister Hossein Amir-Abdollahian said that the United States sent at least two "urgent messages" to Tehran about the simmering tensions in the Middle East. According to Amwaj Media, a media outlet with links to the regime's close circles, Washington has also communicated a potential shift in its stance regarding Iranian assets held in Qatari banks and postponed talks on nuclear issues. The message was allegedly delivered by Secretary of State Antony Blinken during his visit to Doha on October 13.
In a bid to slam the support given to Israel by the likes of the US and EU leaders, who have given their unequivocal support for its response to an attack which was the single most deadly day for Jews since the Holocaust, Hossein Salami, the Commander-in-Chief of the Revolutionary Guards, said visits by US and European officials to Israel are aimed at “resuscitation to delay the inevitable death of the Zionist regime,” a term it uses for Israel.
Salami also warned against an Israeli ground invasion which the IDF today revealed had begun in small measure with a precise infiltration overnight. He warned, “If they move on the ground, the dragon of Gaza will devour them," suggesting the might of the regime's support will be initiated in full force.
Footage released by the Israel Defense Forces (IDF) Thursday showed forces under the command of the Givati Brigade on Wednesday night carried out a targeted raid using tanks in the northern Gaza Strip, as part of the preparation of the area for the next stages of combat.
As part of the operation, the forces located and attacked many terrorists, destroyed terrorist infrastructures, anti-tank positions and carried out work to organize the area, the IDF said. The troops left the area at the end of the mission.