Skip to main content

Why pension funds in Iran could face bankruptcy tsunami

Years of mismanagement and populist legislation, coupled with an increasingly ageing population, have driven Iranian pension funds to the brink of mass bankruptcy.
Women sit on a park bench in Tehran June 9, 2009. Iranians vote on Friday in the 10th presidential election since the 1979 Islamic revolution which toppled the U.S.-backed Shah. Three decades after the revolution, Reuters invited some older Iranians who witnessed the Shah's overthrow to look back at the changes they have lived through. To match feature IRAN-ELECTION/REVOLUTION             REUTERS/Raheb Homavandi (IRAN POLITICS ELECTIONS) - RTR24JM3

Tehran, IRAN — One of the key underlying economic challenges of Iran is the current underfunding of its pension system. Make no mistake: Pension reform must be a priority for the country. Figures posted by the Ministry of Cooperative, Labor and Social Welfare show that "a major portion of pension funds have either gone completely bust or are among the ones relying tremendously on state resources," reported Eqtesad News on Jan. 23.

The most important issues are the imposition of financial obligations by consecutive administrations over the past four decades as well as the approval of populist legislation by various parliaments, and particularly under the previous conservative government. Combined with the pension funds’ own financial problems, the situation is truly dire.

Access the Middle East news and analysis you can trust

Join our community of Middle East readers to experience all of Al-Monitor, including 24/7 news, analyses, memos, reports and newsletters.


Only $100 per year.