The Civil Servants Pension Organization is restructuring its holdings and looking for investment in foreign markets to keep up with its rising pension payments.
The organization is in charge of paying pensions to 2.5 million retired civil servants, according to its chief executive, Mahmoud Eslamian.
Speaking at a conference on Iran’s economic outlook for the current fiscal year (March 2016-17), Eslamian said he is restructuring the organization to ease the handling of its assets worth 20 trillion rials (about $576 million at market exchange rate), Mehr News Agency reported.
According to Eslamian’s economics deputy, Mahmoud Shahshahani, the organization has divided its assets among six specialized holdings.
CSPO’s largest portfolio is its oil, gas and petrochemical holding that generates 70% of the organization’s returns. It also has a holding for financial companies, including banks and insurance companies, as well as a holding for managing pharmaceuticals, foodstuff and agricultural companies, as well as assets of CSPO. There is also a holding that invests in construction.
Shahshahani said the organization is adding a holding with the aim of investing in transportation and tourism.
The organization is also on the verge of a house cleaning.
“We have established a committee to sort out companies that don’t generate profits and we are trying to offload them from our investments,” Shahshahani said.
Just like the government and other state organizations, CSPO is unsure of the exact amount and makeup of its assets. This is especially true about its properties.
“We are making endeavors to create a databank of the fund’s assets, including properties, collaterals and equities owned by our subsidiaries,” the deputy added.
CSPO is weathering harsh times. Mismanagement of the organization’s assets and corruption that prevailed under the administration of former president Mahmoud Ahmadinejad has depleted its reserves.
These days, the fund is juggling assets just to pay pensions. The government managed to rack up debt to CSPO, though it forced the organization to accept some delinquent assets as part of their repayment.
Hossein Abdoh-Tabrizi, advisor to the minister of roads and urban development, who was also speaking at the event, focused on the future. He said to improve the state of Iranian pension funds, their ownership structure should be changed while their workforce should be replaced with adept financiers.
Abdoh-Tabrizi said the government must keep away from the governance of these funds and repay its debt to them.
“Repayment of government debt even in the form of long-term bonds is the best way to rescue these funds from their current state,” he said. However, Abdoh-Tabrizi stressed that injecting new cash without overhauling the governance of these funds is not possible and will only worsen the situation.
