Analysis of the Impact of Premature Mortality on the Inflow and Outflow of Social Security Pension Funds

Reza Reyhan, University of Tehran
Majid Koosheshi, Associate Professor of Demography and leader of Iran's NTA team, University of Tehran

The pension scheme in Iran is a PAYG-DB plan. Despite population changes and their concomitant shifts in the age structure, which theoretically must provide a congenial atmosphere to the demographic dividend by the growth in the population of working ages through the first phase of demographic dividend, pension funds have been encountering a considerable disproportion between revenues and liabilities, which are rendering them teeter on the verge of bankruptcy. The thought-provoking question is why the pension funds in Iran amid the youth bulge are facing substantial liabilities. In this article, population compositions, particularly premature mortality together with marital and employment status, are taken into account as factors leading to lofty liabilities of pension funds amid the first phase of the demographic dividend. The object of this article is to gauge the role of premature mortality in the aforementioned imbalance in the context of the changing age structure. The simulations of the research reveal that the coverage of retirement by SSPF could expand by 2.8% per year if there were solely a 10% decline in premature mortality due to unintentional accidents and cardiovascular diseases.

Keywords: Mortality and Longevity

See extended abstract.