History of social security organization in Iran:
In 1930, the first step was taken for insuring workers against work- connected accidents. By establishing this organization in 1975the number of insured people and type of supports increasingly expanded. Statistics in this area have been compiled and presented as registers included in the Statistical Yearbook since 1966.Medical Services Insurance Organization, This Organization was established according to the Public Medical Services Insurance Act approved in 1994. Statistics in this area prepared and presented as registers have been accessible since 1994.
It should be noted that the Medical Services Insurance Act for government employees was approved in 1972 and administered by the Ministry of Health of the time from 1975.
The Iranian Constitution mandates the government to protect all elderly; Iran has thus developed an extensive pension system that is composed of contributory and noncontributory schemes, which together cover 50 percent of the labor force and close to 60 percent of the elderly population. Contributory systems are defined-benefit with pay-as you-go financing. The Social Security Organization (SSO) is the largest fund, mainly covering workers in the formal private sector and workers retaining government contracts. It currently has 6 million contributors and 1.14 million individuals receiving old age, disability, or survivor pensions.
The Social Security Organization was established in I952 to provide pensions, unemployment insurance, and health insurance to workers in the private sector-including the self-employed and voluntary contributors-and to contractual workers from the public sector. The SSO is an autonomous institution attached to the Ministry of social security and welfare. Today the binding law for the institution is the 1975 Social Security Law, which has been amended several times since 1994.
The SSO provides a wide array of benefits that can be grouped into three categories: cash assistance and compensation, pensions, and health services. Cash assistance and compensation include maternity, sickness, and family allowances; grants for marriage and for funeral expenses; lump sum transfers for physical disability; and unemployment benefits.16 Pension benefits include old-age, disability, and survivor pensions. In addition, the SSO offers outpatient and inpatient health services for the insured and the family of the insured. Today there are close to 1.2 million pensioners in the SSO receiving pension payments equivalent to 5,875 billion. Sixty percent of these expenditures are related to old-age pensions, 33 percent to survivor pensions, and only 7 percent to disability.
The system offers high replacement rates across all income levels. Take the case of individuals who enter the system today and contribute for 30 years. If current minimum pensions and ceilings on contributions are assumed to be constant in real terms, then the majority of individuals, regardless of their income, would receive a replacement rate of 100 percent.
The SSO investment policy is in principle proposed by the High Council of the SSO and executed by the Managing Director of the SSO in coordination with its Board of Directors. The High Council is responsible for setting the general framework of the investment policy (e.g., limits of investment risks, classes of assets where the SSO can invest) and for defining the annual operations budget. Investment policies need to take into consideration the SSO’s triple mandate: i) to provide health, unemployment, and pension benefits to its members; ii) to support social development e.g. through investments in housing; and iii) to support economic development e.g., through the financial support of national projects. The Managing Director and the Board of Directors execute these policies through the Deputy of Economic and Investment Affairs of the SSO and the managers of the different companies directly owned by the SSO-including the Social Security Investment Company (Shasta).The Social Security Investment Company (Shasta or SSIC) was created in I984 to manage the Social Security Organization’s investments in the productive sector.
Shasta’s mandate is to maintain and increase the value of the SSO funds through: (i) investments in industrial, commercial, and mining sectors that impact economic development and yield a reasonable rate of return; (ii) Short and medium-term investments in manufacturing firms, such as those registered with the Teheran Stock Exchange; and (iii) management of industrial, construction, and commercial firms whose shares predominantly are owned by the SSO or Shasta.
The size of the SSO portfolio has been declining as a share of GDP while the structure has changed; giving priority to direct and indirect investments over lending and loans. Up to 1976, the SSO invested its cash reserve fund in the Worker’s Welfare Bank in the form of fixed deposits. After the creation of the Social Security Fund in 1976, the SSO started to diversify its investment activities, but by 1989 close to 80 percent of the portfolio still was composed of long-term deposits.
Current laws: 1975 (social security) and 1986 (self-employed insurance), implemented in 1987. Cash and medical benefits are provided to employed persons in urban areas and old age, disability, or survivor pensioners. Seasonal workers are covered for medical services during the working season. Voluntary coverage for self-employed persons under some determined conditions.
Direct system: Medical care and medicines are provided directly to covered patients through medical facilities belonging to the Social Security Organization.
Indirect system: Medical services are provided through public and private hospitals and clinics, as well as through university hospitals and contracted-out physicians. The cost of inpatient care and outpatient care varies among medical care providers, as do the degree of cost sharing and the rate of reimbursement. Same as for the insured person, coverage is provided for a wife and for the first three children younger than age 18 (age 20 if a student, disabled, or an unmarried daughter), for a disabled dependent husband older than age 60, and for aged dependent parents. Voluntary insurance can be taken from the Social Security Organization for the fourth and subsequent children. Medical services are provided directly through 73 hospitals and 270 medical clinics owned by the Social Security Organization.
Salient Features of the Social Scheme
One of the fund mental conditions of reaching to stable development in progressing countries is the establishing of active social security.
According of the 29 item of Islamic republic laws, foods, residency, occupations, marriage, health and education are the common rights of everybody, and the government has to provide these facilities with the help of cooperation of the people.
The subjects of social security organization (SSO) in Iranian programme, which is five years and started from 1987.we are in 4th programme now .But the subject of ss didn’t any attention. According to the multidimensional and long time programme, this is started from 2003 in Iran during 20 years. These 5 years programes showed be settled on the way of main programme, in the main programme there is suitable situation for the SSO to improve its aims and administrations. According to the importance of Iran, the government attempt to progress in the medicine insurance to make all the people insured.
Therefore, every year it provides some budget for it. To improve this matter all the units of SSO that established a new ministry by the name of Welfare and Social Security Ministry.
The other attempts of the assembly of Iran are the ordering of budget of total social security. (ss)
In addition, it is to affected the poor people by the omitting the subside of goods such as petrol which cased to the lost of so money dollars of the country.
According to the labor laws in Iran all, the employers of firms and small and big industrial have to pay the insurance rights of the workers on a list to the SSO.
Also, in addition of SSO which is the largest unit of providing insurance and treatment in Iran. There are some other responsible insurance organizations for this case, which covered different layers of society.
Some of important organizations which are more than 18 funds (which contain government administrators, villagers, tent-dwellers and martyr families ) such as SSO of Iranian forces found , funds of retirement in any banks which covered the employers and staffs of the banks , and the found of mayoralty which provide the insurance of the staffs.
Also, we can discuss about ss in Iran, from other point of view. It provides insurance of poor people with the cooperation of some other responsible organizations like Helaleahmar(Its duty is the help of people in natural calamity such as ,storm, earthquakes, cataclysm and wars), Imam Khomeini Committee org.(Its duty is the helping to poor people and low categories of society ) , Bonyad Janbazan org. (Its duty is the coverage of those people which injured in Iran and Iraq war and martyer families), and Behzisty organization (its duty is the helping and keeping of affected people).
All Services Provided By SSO
Services of SSO can be divided to two short time and long time groups.
1- short time benefit services :
1-1- treatment services:
All the physical services such as surgeries, cures, and prescription for the people who are make them selves insurants applied by SSO in its health centers. Also SSO according to the privacy of economic of Iran , has thousands of powerful staffs and leveled in the second rate after government .
SSO also make agreements with private units such as pharmacies and hospitals and pay the expenses of the treatments of the people to the expenses of the people to the such units .so, it provides the expenses of protez and orotez .when a person had gotten any injury during
The work SSO pays the insurance expenses.
1-2- Marriage merits :
If any body had gotten married (formal marriage) and had had two years insurance record the SSO pay extra salary in amount of least month salary to the employee as an advantage.
1-3- Funeral ceremony expenses :
If any body, which had been insurance, die, SSO pay some amount of expenses to the family of dead body.
1- 4- A. pregnancy expenses:
Women at least two children can be bring out in the case she can get four months off from the office with salary.
1-5 – non –Financial tickets:
SSO give some non –financial tickets for buying vital goods of life twice every year to the retirements.
2 - Long time benefit services:
2-1- dole to unemployed:
If any insurance people loss his work unwillingly has had minimize 6months insurance payment experience he can got helping salary as unemployment expenses from 6 till 52months.also this period of time estimated his employment experience .
2-2- Major paralysis:
If any insurance during the work has gotten entire paralysis, and could not be able to continue his job ‘he can get month-pensions according to the laws.
2-3- Minor paralysis:
If any body has gotten an accident and lose one of his /her body members, SSO would be pay some amount to him/her.
2-4- Death pension for the families of dead person:
If any worker has dead, SSO pay monthly pensions to his/her families constantly (sons until 18and daughter and wife until their marriages.)
2-5- Retirement’s pensions:
If any body has been retirement conditions (age and insurance records) he /she can be offer his/her retirement request to the SSO .
2-6- Family benefits pension:
It is paid some additional payment to each retired that has been married along with two children monthly.
Organizational Schemes of the SSO
More than 50 years passed from the establishing of SSO. In this period the laws and rules of SSO had been faced so much up and downs .because of the needs of employees and government its constitutions reviewed and renewed by the Islamic consulting assembly however ,in last years there were hopeful motions in this organization for planning total programs which include strategic planning unit.
This planning shows that SSO has three levels for planning.
The first level consists of manager, members and deputies as central committee in SSO for total planning. In here, because of insurance of the capabilities of SSO eight total strategies are recognizable.
In second level contains all deputy committees. In here ideas and offers has been surveyed then had been sent for final decisions.
Operational level is the last, which contains thirty committees, which administrate.
Unfortunately, because of the replacement of managers there is not any operation in this level .and also in legal levels also there is not any activation.
According to the mentioned points, we can find out which the planning Management in here is from up to down .so, unfortunately, there is not any coherent plan for administrating.
Financial Overview of SSO
SSO is obliged that the remain of accounts of each year for obtaining the profit ,allocates the investment sector for increasing the finance and this rule is the using the available potential for response to the future obligations. With the exploring of the earning and costs of the organ from 1961 to 2004 we find that in this period of time we have 79%of income that has been spent .So in according to the rules of SS this range in very high . Also maximum of the mentioned range had been in 1975 that is par to 93.4%.
In the 1994 to 1999 portion of costs to incomes from 68% has been increased to 93% that caused some worrying about future of the organization
Problems Faced by the SSO
The future of Iranian social security organization is gloomy for a number of reasons disregard provision of insurance ,interfere of government , nonsense retire, flying of payment actual premium per employers , scale down of incomes than the total cost increasing, and political factors.
The unemployment rate is a bout 13 percent and probably that wont punctual.
There are so much presses on SSO to reduce the premium from the economical firms and employers, on the other hand ,the junior retirement of hard and harmful jobs (20years working instead of 30 years in any age ) which imposed by the government to the SSO ,because of political problems and creating jobs bring up more financial problems to the SSO .
Also , so many employers avoid from the raying of premiums and avoiding listing of real salaries of employees which is the root of premium deduction are some other problems which this organization for cure services do there bests and provide remedy facilities .
However, be use of various problems and weakness of government in this case, the SSO products the care materials also.
It caused so much expense to the SSO, because it has to build so many hospitals and clinics and occupied so many employees, so, because of political out comes. The SSO could not be getting rid of this problem.
The government couldn’t pay its debts in time to this organization (to support the small industrials the government establish any rules for premium to the employers which it is up to 5 workers by the employers ) and establishing of some unverifiable and governmental firms for its payment are some other problem.
Protection of SSO capitals and its stability and real value of it when affected by the unemployment and inflation in Iran and unknown effects are some other obstacles of SSO.
They organization has a 50years experience and is one the insurance organizations gave it future also.
In the past times from 65 percent which have rayed premium one has become retirement, but in recent years from 6 percent have one retirement, which use the fund benefits (m. poustindouz.2005.the effects of inflation on incomes and expenses of unemployment expenses fund in SSO. Azad university of Iran).
UN flexibility of laws of SSO and fix binge of main factors which are effective, such as premium price , age of retirement and increasing of expenses because of increasing of cure expenses and life pensions are some other problems which SSO has faced whit them.
Financial Relationship of the SSO
SSO,s incomes provide by the premiums , capital savings and dedicated supports. The price of premium is 33% which deduced from the root salary of the employees in every month which is payable by the employers 7% of employees premium deduced from workers salary and 3% of it has payer by the government and rest of 23%has paid by the employers .
From the total amount of premium, 3%has paid by the government to the SSO and other 3% separately saved in a dependent fund of SSO for dole. From the 27%maimize 9/27 related to the cure, 16/27related to the life-pensions and 1/27 is the expenses of the official and management .so, the remain of the premium
Internal and external graduation aids saw in saved in saving funds.
So, its clear that the SSO can use from its savings for investing, also, the SSO has a dependent bank by the name of refoah -e-karegaran (labor –welfare) . More than 90%of the sheerness of this bank related to the SSO.
Other Related issues
In all over the word ss is one of the vital items for evaluating of the improvement and convenience of the people .ss in Iran has different custodians, and this caused so mach unsatisfaction among the people. So, all the administrators’ covered by a new ministry is the guidance of ss and coordination of all custodians.
there more then five million main insurance people in the industrial and services units in Iran .by estimation of the families of those people which are insurance SSO has given services for more than 27 million people in Iran.
Its thirty-nine percent of the total population of the country and included sixty percent of urban population .also, more than 150 thousands, small and big firms cooperated with SSO.
SSO,is one of the significant investing organizations in Iran. it investing on the ship making, medicine, car making , Goods producing industries. In recent days, also it investigates about the investing oil and Gas Company in Assaloyeh in the south of Iran. There are 52/000 employees in this organization. Which include 5000 physician and PhD degrees. The topmost position in this structure is the board. There are three people and usually one of them chose as the director.
Tacit, board (and director) by queen of the welfare and social security offered to government for final confirmation.
The fund of SSO is independence from the financial point of view but from the political and official point of view, it is dependent on the government.