Hossein Amiri said the massive organization borrowed 50 trillion rials ($323 million) from banks on monthly basis in the last fiscal (ended March 20), IBENA reported.
Pensions have risen by 36% in the current fiscal (March 2019-20) and the SSO will face new challenges in meeting its financial commitments.
“The organization is in need of at least 90 trillion rials ($582 million) to pay pensions this year,” Financial Tribune quoted Amiri as saying.
The rising number of retirees and shrinking returns from investments are adding pressure on the organization and has forced it to sell its assets to keep up with the rising pensions.
Amiri said the organization is trying to reimburse its debts to banks through debt swaps. SSO is the main social insurer for the private sector in the country of 80 million people.
During the tenure of former president Mahmood Ahmadinezhad, most pension funds went bust after his administration sold state-owned companies to the SSO in lieu of its debt and appointed incompetent people to high positions.
Furthermore, despite the transfer of companies to pension funds, government debt to the funds and banks have surged, as is the case with most of its contractors.
Amiri pointed to the plan to divest Bank Refah Kargaran-affiliated to SSO and added that as per Article 44 of the Constitution the bank should be privatized and up to 15% of its shares must remain under SSO ownership.
However, that has not happened and the overall privatization plan has been put on hold awaiting structural reforms.
Article 44 divided the economy into three main sectors, namely public, cooperative and private sectors. The law obliges government to divest 80% of its holdings to the private sector.
SSO is a joint venture of three parties: the government, workers and employers. The trilateral agreement ensures the social security of workers, but in recent years the organization has been facing an uphill task as an increasing number of people retire every year while new jobs are few and far between. The result being that the income (insurance premium) of the SSO has shrunk every year while its expenses are of the ascending order.