A study entitled “Feasibility Study for the Supervision and Regulation of Pension Funds by Central Insurance of I. R. Iran” has been released by IRC that attempts to present the private pension schemes established in the selected countries and how they are being supervised. The study also addresses Iran’s social security structure, the necessity of implementing private pension schemes, the principles, procedures, and tools for supervising and regulating such private pension funds, according to PRIAO, IRC.

Based on the findings of the study, the recent socioeconomic changes in Iran such as low birth rate, ageing population, and retirement age reduction has increased the retiree population and this has pushed up the costs of the pertinent organizations. Such shifts will create several adverse impacts such as liquidity deficit for significant funds such as Social Security Organization and Civil Servants Pension Organization.

In order to amend the social security and pension structure in the country, the activity of private pension funds have been endorsed and the legislator has set out four basic conditions for the establishment of such funds including complete coverage of all the future pension liabilities, legal and constitutional support of the government, no commitment of the government for the pension fund liabilities, and professional and technical supervisablity. Social and welfare oriented public pension schemes and economic and financial based private pension schemes have divergent objectives, hence require distinctive supervisory and regulatory tools. Due to their long-term nature, the macro-supervision of the pension funds in many countries is normally performed by a governmental organization and most likely by the occupation, economic or health ministries.

According to the findings of this report, Central Insurance of I. R. Iran is the most appropriate institution to supervise private pension funds since:

-    Given the population changes, job market, and economic conditions, social security of Iran requires a systematic movement from its traditional form to a rather more personal-voluntary form that is offered as an insurance coverage in the world.

-    Public and private pension funds due to their nature and objectives require different supervisory tools and this task must be assigned to some professional institutions.

-    Central Insurance of I. R. Iran (Insurance Supervisory and Regulatory Authority) with its many years of experience in the insurance field and with the support of its longstanding expertise and professional quality is more compliant with the ten principles set out by The International Organization of Pension Supervisors (IOPS).

-    Due to its role and function, Central Insurance of I. R. Iran as a legislator stands in a more appropriate position for the establishment of private pension funds and has the necessary expertise and professional quality and structural and technical properties for supervising private pension funds.

The Persian full text of the research report is available at this link.