HRANA– In recent decades, the country’s pension funds, especially the Civil Servants Pension Fund, the Social Security Organization, and the Armed Forces Pension Fund—have faced a deep structural crisis. This crisis stems from chronic imbalance between resources and expenditures, unprofessional policymaking, and weak corporate governance in managing these institutions. The share of public budget contributions to cover the deficits of these funds has reached a level that confirms their non-independence from the government, calling into question the fundamental principles of insurance. Alongside this, wage arrears owed to workers and employees, which lead to delays in insurance premium payments, have intensified the crisis and created a chain of deferred obligations that directly threaten the liquidity of the funds. Therefore, the current condition of the funds should be viewed not merely as a financial issue, but as a legal and institutional crisis which, if left unaddressed, could lead to the collapse of one of the key pillars of social justice and economic security.

Amid this situation, the government’s approval of the Regulation on Changing the Retirement Age and Service Record in 2025 (1404) has been introduced as a parametric reform aimed at improving the sustainability of the funds. However, the key question remains: can this measure effectively address the structural crisis, or will it merely delay the inevitable collapse?

The 2025 Retirement Age and Service Record Regulation was adopted based on Article 76 of the Civil Service Management Law and Article 111 of the Social Security Law. Its stated objective is to align retirement conditions with demographic indicators and increased life expectancy. According to the regulation, the minimum retirement age has been raised to 62 for men and 55 for women, while the required years of service have been increased to 35 and 30, respectively. In addition, the regulation includes transitional and gradual provisions to prevent a sudden shock to the labor market and obliges the government to periodically assess its economic, social, and financial impacts.

Nevertheless, from an administrative law perspective, this regulation appears to be more a product of short-term fiscal thinking than a result of comprehensive insurance-based analysis. In essence, the regulation aims to reduce the financial burden of the funds in the short term, without simultaneously addressing premium collection systems, investment efficiency, or financial transparency within the funds. In other words, the government, using administrative regulatory tools, has attempted to temporarily contain the chronic liquidity crisis of the funds by raising the retirement age, without providing a scientifically grounded justification for this decision.

In insurance and financial theory, increasing the retirement age theoretically delays pension payments and extends the period of premium contributions, thereby improving the balance between resources and expenditures in the short term. However, this effect only materializes when there is a stable flow of premium income and high formal employment rates. In today’s Iranian economy—marked by negative growth in stable employment, an increase in informal labor, and widespread evasion of insurance, raising the retirement age does not necessarily translate into higher fund revenues.

Moreover, extending the length of employment amid a stagnant labor market blocks job opportunities for younger workers and reduces employment turnover, which in the long term further weakens the financial balance of the funds. From a public law perspective, the 2025 regulation was enacted without a comprehensive research foundation or stakeholder engagement, despite the fact that such a decision should be based on practical analysis and grounded in the principles of fairness and legitimate expectations. In other words, sudden changes to retirement conditions without compensating for workers’ and employees’ acquired rights can be challenged under the general principles of administrative law and the prohibition on retroactive deprivation of vested rights.

The greatest obstacle to realizing the goals of the 2025 regulation is the widespread issue of wage arrears and the accumulated debts of employers to pension funds. When both public and private employers delay in paying their share and the workers’ share of insurance premiums, funds not only lose access to current resources but also face a growing volume of uncollectible claims in the future. Raising the retirement age in such conditions merely defers the obligations to a later time and, far from ensuring financial stability, worsens the funds’ situation by extending employment periods during which premiums are not fully paid.

Legally speaking, employers’ failure to pay insurance premiums constitutes a violation under Articles 36 and 39 of the Social Security Law and carries both civil and criminal penalties. Yet, due to significant weaknesses in enforcement and administrative oversight, these penalties have proven ineffective. Instead of adopting serious measures in this domain, the government has focused its efforts on changing the retirement age. However, without collecting wage arrears and reforming oversight structures over employers, any parametric reform will remain fruitless. In fact, the 2025 regulation, in the absence of an effective claims collection system, serves more to shift the crisis between generations than to resolve it.

Considering all the above, the 2025 Retirement Age and Service Record Regulation, while seemingly an attempt to ease the financial pressure on the funds, is in practice a delaying and unsustainable policy that postpones the crisis rather than undertaking structural reform. Real reform can only occur when the government and legislature adopt a comprehensive, insurance-based approach and implement a combination of institutional, financial, and legal reforms simultaneously, including:

1. Reforming the premium collection system and granting quasi-judicial authority to the funds to seize and recover claims from delinquent employers;

2. Establishing a transparent and public auditing system over the financial operations of the funds and requiring publication of financial statements in accordance with international standards;

3. Diversifying revenue sources through productive, non-rent-seeking investments;

4. Preserving contributors’ vested rights and designing genuinely fair and transitional arrangements;

5. Creating a complementary insurance system and separating welfare funds from insurance-based funds based on their mission and financial logic.

Ultimately, if the government seeks to address the crisis solely through administrative tools and without undertaking fundamental reforms—focusing only on increasing the retirement age—the outcome will be nothing but the erosion of public trust and the deepening of instability. The sustainability of the funds requires rule of law, transparency, and institutional accountability—not merely changing retirement parameters and numerical thresholds.