The government continues to encourage the cash-strapped organization to sell off its shares owned by Social Security Investment Company (known by its Persian acronym Shasta). This is while the government’s indebtedness to SSO is hitting new lows by the day.
The organization’s resources will be channeled into the treasury as of the beginning of the new Iranian year (March 21), as determined by lawmakers last month, according to Financial Tribune.
One of the main criticisms leveled at Minister of Cooperatives, Labor and Social Welfare Ali Rabiei, as well as one of the articles of his looming impeachment on Sunday, is the sad state of pension funds, particularly SSO, the Persian daily Shargh reported.
Under the circumstances, the significant role of those in charge of the country’s largest pension fund is undeniable. But who is going to defend the interests of the laborers pension and welfare fund?
The Board of Trustees of the Social Security Organization of Iran is the highest decision-making body of the country’s social security. So the onus is on the board to shape “the macro policies and strategies of the fund” and approve “planning and budgeting as well as annual financial statements of the fund”.
The board is in charge of “recruitment or dismissal of the Board of Directors and the Oversight Board”. Setting the salary and perks of the board of directors, the managing director and the oversight board is up to the board of trustees, which also ratifies financial, administrative and recruitment bylaws.
The same board decides how to manage the fund’s resources, in which markets to invest, which companies to buy or whether to negotiate and collect government debts that now amount to over 1,500 trillion rials (about $33 billion).
Simply put, the board of trustees holds the key that control the destinies of the workers who pay premiums to this pension fund.
Autonomy: A Rare Commodity
As per reforms introduced by the government of former president Mahmoud Ahmadinejad in its final year in office, SSO’s board of trustees took over the responsibility of every pension funds in the country, including the Civil Servants Pension Fund and the Rural and Nomadic Insurance Fund.
Each of these insurance funds has its own unique interests and needs to enjoy autonomy in decision-making to advance its objectives and streamline its operations.
On pension funds’ lack of autonomy, the labor minister once said, “An investigation shows decision-makers outside the Civil Servants Pension Fund had control over more than 4,500 trillion rials ($100 billion) of its resources and expenses.”
Over the years, individuals at the top of the decision-making hierarchy of pension funds did not care about dos and don’ts related to the interests of the funds and workers.
For example, the previous government imposed commitments to SSO, which were entirely beyond its purview. In actuality, the then government muddled up the objectives of Social Security Organization with the government’s responsibilities about social security.
Shasta controls nine holdings operating in a wide range of sectors, including petroleum, petrochemicals, pharmaceuticals, cement, transportation and finance. These holdings manage about 200 subsidiaries and have 1,000 board members.
“The company acquired more than 90% of its assets as a result of the previous government’s debt settlement and 70% of them are either running at losses or underperforming,” Morteza Lotfi, an official with Shasta said.
A Not-Very-Joint Venture
SSO is a joint venture of three parties: the government, workers and employers. Each of these parties has to deposit its share of premium every month. This trilateral contract ensures the social security of workers and provides for employers’ and the government’s future workforce that is a vital element of the country’s production cycle.
According to the law, SSO’s board of trustees is composed of nine members. The surprising point is that currently six of these members are appointed by the government, two represent the workers and one belongs to the employers’ community.
A quorum of six is enough to conduct the boards’ meetings and proposals can be approved by five votes.
The government’s representatives on the board include Minister of Cooperatives, Labor and Social Welfare Ali Rabiei and his deputy Abolhassan Firouzabadi; the head of Management and Planning Organization and Vice President Mohammad Baqer Nobakht; President’s Deputy for Economic Affairs Mohammad Nahavandian; former minister of science, research and technology, Mohammad Farhadi; and Deputy Minister of Industries, Mining and Trade Mehdi Karbasian.
Oliya Beigi and Akbar Shokat are representatives of workers and Mohsen Khalili-Araqi stands in for employers.
Nothing will go wrong even if the latter three do not attend the sessions or vote against the proposals.
For instance, the government decides to settle million dollars of its debts by handing over incomplete development projects to the fund. Nobody can oppose this decision, as the same people who floated the idea in the government approve the measure as members of the SSO Board of Trustees.