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Expediency Council Censures Bill on Women’s Early Retirement

The add-on would have mandated all government institutions as well as non-government organizations to allow women, with no age bar, to retire after 20 years of insurance premium contribution, and entitle them to 30 days of pension
If the bill is approved, one-third of employed women will be able to retire.If the bill is approved, one-third of employed women will be able to retire.

A bill approved by lawmakers to make women eligible for retirement after 20 years of work, regardless of age, was censured by the Expediency Council and sent back to the parliament for revision.

The council reprimanded the bill on the grounds that it would “impose heavy financial burden on the government” with its current general outlines, the parliament’s news agency ICANA reported on Sunday. 

“As per this bill, the government will have to pay pension for longer years to women, whose life expectancy has now increased to 75 years,” the council noted. 

Lawmaker Soheila Jelodarzadeh, who had proposed the bill had said, “The early retirement will help mothers allocate more time to their children through their adolescence and teenage years.” 

The bill, passed by a majority of lawmakers present in the 290-member chamber on January 11, seeks to modify Iran’s social security program that has come under immense strain as the population ages and people live longer due to better healthcare. 

Under the existing program, retirement pension applies to men aged 60 or women aged 55 with at least 20 years of service; or men aged 50 and women aged 45 with at least 30 years of service; or at any age with at least 35 years of service. Further, women who retire at 55 or 60 with 20 years of service are entitled to 20 days of pension.

The add-on would have mandated all government institutions, organizations and bodies as well as non-government organizations to allow women, with no age bar, to retire after 20 years of insurance premium contribution, and entitle them to 30 days of pension. 

But a majority of government bodies and officials are opposed to the bill as it would have imposed additional burden on the government which is already saddled with huge deficits.

Hojjatollah Mirzaei, deputy minister of cooperatives, labor and social welfare, had said earlier that implementing the bill would cost the Civil Servants Pension Fund and Social Security Organization 50 trillion rials (approximately $1.3 billion) and 300 trillion rials ($7.78 billion) respectively, according to IRNA.

If the bill is approved, one-third of employed women will be able to retire and “this will result in huge economic consequences.”

The Expediency Council also said the bill is not compatible with the provisions of the Resistance Economy (Article 16), a set of policies outlined by the Leader Ayatollah Seyyed Ali Khamenei, to boost domestic production and wean the country off oil export revenues.

Salman Khodadadi, head of the Majlis Social Commission said the proposal was in line with the population policy directive of the Leader, and the council has asked the parliament to make necessary amendments in a way that the bill can benefit both the society and the government. 

“Lawmakers had proposed that age ceiling of 55 years be considered for women. However, the council suggested an age bar of 60 years for eligibility.” 

The sixth plan, now in the final phase of approval in the legislature, has made it a priority to implement the 14-article population recommendation made by the Leader in May 2014, including promoting bigger families and strengthening the institution of the family. 

  Costly Proposals Rebuked

Economists and experts have also rebuked parliament for proposing over the past couple of weeks, numerous costly bills regardless of how the funds can and should be made available.

Economist Saeed Leylaz, one of the critics, says “When the government debts amount to over $181.5 billion, pension funds are bankrupt and banks are grappling with huge difficulties, such costly schemes are like playing Russian roulette.”

When people retire, they not only stop paying insurance premium to the social security funds, but are also entitled to pensions. They will, he claimed, enter the job market in different ways and take jobs that should otherwise be available to younger people.

“As a result, no positive change will occur in the job market and on top of that, the incomes of social security funds will decrease while their outlays rise.”

  Not Far From Insolvency 

Member of the Majlis Social Commission Masoud Rezaei as well as Mohsen Riazi, deputy head of SSO for social and financial planning, had came down hard on the proponents of the bill while reproaching it for contributing to the monumental problems of pension funds on the brink of bankruptcy.

“Right now, 16 out of 18 pension funds in the country are touching the borderline of definite bankruptcy,” Rezaei told a parliamentary session in early January.

“The other two funds are not doing well and are below global indices, and almost all pension funds have difficulty supporting the retirees.”

Pension systems require contributions from the workforce to function. If more retired people receive pension and fewer working people contribute to the fund, the system is doomed.

Noting that implementing such pension policies demand the provision and allocation of sufficient funding, Rezaei said the undesirable economic state and mismanagement over the years have driven pension funds into a state where they are piling up losses and will end up insolvent if reforms are not introduced at the earliest. 

The bankruptcy of pension funds has become an issue of major concern worldwide. According to a recent study conducted by Allianz and published in The Economist, pension systems in most Asian countries are “fragile and unstable.”

Two major factors threaten the pension systems worldwide: reduced birthrates and increasing life expectancies, and the widening gap between the rich and poor due to economic liberalization.

Hong Kong and Singapore are the only countries in Asia to rank within the top 20 nations worldwide for pension sustainability. Western countries face the same problem. In Germany, France, Italy, England, Portugal and Spain, pension fund liabilities amount to more than three times each country’s national GDP.

In Taiwan, the pension issue is particularly severe. It is estimated that the nation’s pension system for civil servants will be depleted in about 10 years if no drastic changes are made to the current system.

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