2003年-世界发展银行全球_The_Pension_System_in_Iran___Challenges_and_Opportunities_Volume_1_Main_Report_102页_7mb

Iranian Pension System: Challenges and Opportunities

Core Content

This report evaluates the Iranian pension system and proposes policy interventions to improve financial sustainability, management, incentives, and equity. It was prepared at the request of the Management and Planning Organization of Iran and focuses primarily on the Social Security Organization (SSO) and the Civil Servants Retirement Organization (CSRO), the two main pension funds.

Main Report Structure

• Background: The report outlines the context and motivations for pension reform in Iran.
• General Overview: Provides an introduction to the structure and scope of the Iranian pension system.
• SSO and CSRO Assessments: Sections 3 and 4 present detailed evaluations of the SSO and CSRO, including institutional issues, coverage, contributions, benefits, and financial sustainability.
• Tax Treatment: Section 5 discusses the tax implications of worker savings within the pension system.
• Pension Reform Framework: Section 6 proposes a general framework for pension reform, drawing on international experiences.
• Reform Directions: Section 7 outlines strategic directions for reforming the Iranian pension system, analyzing financial and fiscal impacts.
• Implementation: Section 8 focuses on the political economy of reform and the steps necessary for successful implementation.

Key Findings

Current Pension System Overview

• Coverage: The Iranian pension system covers close to 50% of the labor force and 40% of the population over 60. However, coverage is mainly concentrated in urban areas.
• Replacement Rates: Statutory replacement rates for full-career workers (40 years) are extremely high, reaching 75% in the CSRO and 100% in the SSO, compared to around 60% in OECD countries.
• Contribution Rates: The current contribution rates are high, with implicit real rates of return ranging from 5% to over 20% per year.
• Financial Sustainability: Both SSO and CSRO are facing insolvency due to the high replacement rates and the aging population. Unfunded pension liabilities could reach 140% of GDP for the SSO and 35% for the CSRO if the system remains open to new entrants.

Financial and Fiscal Implications

• Unfunded Liabilities: The system is likely to face significant unfunded liabilities, which threaten the credibility of fiscal policy and the welfare of future generations.
• Early Retirement Incentives: Both SSO and CSRO have historically provided incentives for early retirement, which have contributed to the rapid growth of pension expenditures.
• Labor Market Distortions: High replacement rates and early retirement incentives distort labor supply and retirement decisions, especially for low-income workers.

Proposed Policy Interventions

Reform Type I: Parametric Reforms

• Objective: Maintain current contribution rates but reduce replacement rates to at least 80% for full-career workers.
• Key Measures:
  • Implement uniform retirement rules for all workers.
  • Set a retirement age of 63–65 years with indexing to life expectancy.
  • Eliminate special incentives and lump-sum payments.
  • Index wages and pensions to system average wage and consumer prices, respectively.
  • Reduce the minimum pension to 70–80% of the minimum wage, only for those who have contributed for at least 30 years.

Reform Type II: Downsizing the DB-PAYG System

• Objective: Reduce the size of the DB system and promote voluntary savings.
• Key Measures:
  • Reduce the contribution rate below 15%.
  • Set a targeted replacement rate of 60% for full-career workers.
  • Introduce a maximum covered wage of three times the economy-wide average.
  • Transition new workers to a new DB scheme with pre-funding and lower benefits.
  • Allow current workers to switch to the new system, with initial capital based on past contributions and notional interest.
  • Develop a regulatory framework to support contractual savings (CS).

Reform Type III: Notional Defined Contributions (NDC)

• Objective: Introduce NDC and promote voluntary savings.
• Key Measures:
  • Reduce contribution rates and transition to a system where contributions are accumulated in virtual individual accounts.
  • Use notional interest rates based on wage growth.
  • Ensure diversification in investments and allow for foreign investments.
  • Eliminate taxes on investment income.
  • Introduce a more sustainable rate of return on contributions.
  • Improve governance and accountability through independent audits and external custodians.

Institutional and Management Issues

• Governance: Current governance structures are weak and lack transparency. The report recommends clarifying responsibilities, improving selection processes, and separating governance from management functions.
• Investment Policies: Investment policies are complex, risky, and not in the best interest of plan members. The funds have been used to restructure public companies, which has led to losses and market distortions.
• Accountability: Recommendations include conducting mark-to-market valuations, improving reporting mechanisms, and introducing periodic external audits.

Coverage and Equity

• Coverage Expansion: Reducing contribution rates and implementing credible reform programs can help expand coverage.
• Equity Concerns: The system creates intragenerational and intergenerational transfers, favoring high-income and well-educated workers. Current benefit formulas penalize low-income workers by considering only the last two years of salary.

Conclusion

The report highlights the need for a comprehensive pension reform that balances financial sustainability, equity, and labor market incentives. It emphasizes the importance of governance, transparency, and the development of voluntary savings mechanisms to ensure long-term viability of the pension system.