Financing pensions in Iran: Future challenges and reforms

Decreasing fertility rate and the rising of life expectancy has caused funding of public pension schemes with severe problems in many countries. Increasing future promises in the old PAYG system while paying little attention to income strategies and investment threatens the sustainability of pension funds. As result, in previous years many countries have carried out major reforms in their pension systems and the way of financing them. In our country, however, the reforms have been postponed for various economic and political reasons. This paper reviews the current funding situation of Iran’s social security and discusses future challenges. The main conclusion emphasizes on urgent and critical reforms whose deferment exacerbates the situation and makes any improvement in funding of pension liabilities more difficult.