Future Studies on the Financial Sustainability of Pension Funds in Iran

Document Type : Research Paper

Authors

1 Ph.D, Department of Accounting, Faculty of Management & Accounting, Allameh Tabataba'i University, Tehran, Iran.

2 Associate Prof., Department of Accounting, Faculty of Management and Accounting, Allame Tabataba'i University, Tehran, Iran.

3 Associate Prof., Department of Technology Management and Entrepreneurship, Faculty of Management & Accounting, Allameh Tabataba’i University, Tehran, Iran.

4 Assistant Prof., Department of Accounting, Faculty of Management & Accounting, Allameh Tabataba'i University, Tehran, Iran.

10.22059/acctgrev.2024.383510.1009025

Abstract

Objective
Over the last few years, pension funds have encountered sustainability issues. Despite this, no scientific research has been conducted on strategies for overcoming instability. Therefore, the current issue is to identify the key drivers influencing the financial sustainability of pension funds and analyze and understand their interrelationships. Additionally, it is crucial to pinpoint areas for action and develop strategies and plans to overcome financial instability based on potential future scenarios.
Methods
In terms of its goal and nature, the current study is applied and uses a mixed-methods approach, respectively. Moreover, the study was conducted using both survey and exploratory approaches. To address the issue, the impact and influence of the key drivers were determined through structural analysis and results obtained from MicMac software. By identifying the significant and uncertain key drivers, future scenarios were extracted according to the Schwartz Theory. Through content analysis of expert interview results and the literature review, the areas of action and policy-making for pension funds were examined, and strategies were formulated by integrating these actions. Using MATLAB software, the fuzzy inference system, and based on six stable planning methods, robust strategies to improve financial sustainability were established.
Results
The research findings reveal that sanctions, economic and military tensions, along with the independence of the funds from the government are the two primary key drivers of the financial sustainability of the funds, exerting the greatest influence on financial sustainability and other key drivers. Morphological analysis of these two key drivers results in nine potential scenarios that pension funds may face in the future. The research findings highlight ten strategic action areas, resulting in the discovery of thirty-two distinct strategies and the creation of ten knowledge bases. Using the fuzzy inference system and knowledge base analysis, the essential data for analyzing the robustness of strategies was gathered. The strategies to overcome financial instability were assessed using the results from six stable planning methods. The chosen strategy includes reforming and enhancing parameters that impact pension funds’ obligations. Additionally, it seeks to implement a multi-pillar system, integrate the pension system with the tax system, and develop insurance schemes. Furthermore, the strategy focuses on providing comprehensive coverage (including migrants) for taking part in pension and insurance plans and delegating the management of the fund’s investments to financial institutions to boost profitability.
Conclusion
Structural analysis of the key drivers highlights the significance of macroeconomic variables and fund governance. In addition to their impact on sustainability, these two dimensions also affect other key drivers. Therefore, the relationships between these key drivers must be taken into account in decision-making. Furthermore, these dimensions are heavily influenced by general national policies and greatly impact the potential future scenarios. Revisiting this matter will positively influence the funds' performance. To overcome financial instability, pension funds must take extensive actions, including drafting new pension schemes, securing sustainable funding sources, and improving investment returns. Pension system laws and regulations need to be reviewed by the relevant authorities, and the independence of the funds must be considered in financial decision-making. Given the intertwined social and economic impacts of pension funds, any reforms or strategies adopted in this sector must be implemented with full stakeholder awareness and a thorough assessment of both visible and hidden effects to ensure the best outcomes.

Keywords

Main Subjects

References

 
Abdolazim Beig, F. (2019). Approach to Reforming the Pension System in Iran. Master's thesis, Tehran: Allameh Tabatabai University. (in Persian)
Ansari, M. A., Falahati, A. & Delangizan, S. (2017). Modelling and Strategic Analysis of Pension Crisis in Iran: A Game Theory Approach. Journal of Improvement Management, 11(1), 61-92. (in Persian)
Asadi, Z. & Yavari, K. (2022). The effect of sanctions on financial instability of Iranian banks. Quarterly Journal of Quantitative Economics, 18(4), 1-35. doi: 10.22055/jqe.2020.30490.2131. (in Persian)
Balugani, E., Butturi, M. A., Chevers, D., Parker, D. & Rimini, B. (2020). Empirical Evaluation of the Impact of Resilience and Sustainability on Firms’ Performance. Sustainability, 12(5), https://doi.org/10.3390/su12051742
Bellucci, M. & Manetti, G. (2018). Stakeholder engagement and sustainability reporting. London: Routledge.
Country Pension Fund. (2023). Statistical publication of the Country Pension Fund. Issue 34. https://www.cspf.ir/wp-content/uploads/2023/07/spring1402-1.pdf (in Persian)
Devesa-Carpio, J.E., Rosado-Cebrian, B., Álvarez-García, J. (2020). Sustainability of Public Pension Systems. In: Peris-Ortiz, M. Álvarez-García, J. Domínguez-Fabián, I. Devolder, P. (eds) Economic Challenges of Pension Systems. Springer, Cham. https://doi.org/10.1007/978-3-030-37912-4_6
Ebrahimnejad, A. & Karimi, M. (2018). Pension Fund Governance: Issues and Challenges. Social Security Journal, 14(3), 91-104. (in Persian)
Enaiati, A., Kordestani, G. & Mohammadi Molgharni, A. (2022). Provide a model for assessing financial sustainability in the Social Security Organization. Journal of Accounting and Social Interests, 12(1), 1-20. doi: 10.22051/jaasci.2022.40183.1696. (in Persian)
Francois, E. J. (2014). Financial sustainability for nonprofit organizations. Springer publishing company.
Galasso, V. (2019). Designing a pension system. Rivista di estetica, (71), 204-221. https://journals.openedition.org/estetica/5747
Gleißner, W., Günther, T., & Walkshäusl, C. (2022). Financial sustainability: measurement and empirical evidence. Journal of Business Economics, 92(3), 467-516.
Molaei, M.M. & Talebian, H. (2016). Futures Studies of Iran’s Issues by Structural Analysis Method. Majlis & Rahbord, 23(86), 5-32. SID. https://sid.ir/paper/224877/en (in Persian)
Nikbakht, M., Namaki, A., Karami, G., & Sedighi Khavidak, F. (2023). Providing a Framework for Developing an Optimal Model of Financial Reporting of Pension Funds in Iran. Journal of Accounting Knowledge, 14(2), 179-200. doi: 10.22103/jak.2022.20054.3754. (in Persian)
Rahmani, H. & Seifi Kalestan, A. (2022). Identification of Strengthening Driving Forces of Traditional Persian Medicine in Horizon of Ten Years; A critical Review on the Persian Traditional Medicine. Quarterly Journal of Interdisciplinary Studies on Strategic Knowledge, 12(46), 186-165. (in Persian)
Razavi, S. M., Bozorgasl, M. & Amiry, M. (2020). Long-Range Planning of Asset Allocation in Pension Funds: An Application of Scenario Planning. Journal of Executive Management, 12(23), 41-65. doi: 10.22080/jem.2020.17837.3074. (in Persian)
Rees Jafari Motlagh, R., Abdoli, G., Nasiri Aghdam, A. & Amiri, H. (2020). Investigating the effects of demographic change on the financial sustainability of the pension fund using the Overlapping Generation Model based on the DSGE model. Quarterly Journal of Economic Research and Policies, 28 (96), 121-162. (in Persian)
Research Center of the Parliament (2022). Review of the 2023 National Budget Bill in the Pension Funds Section. Accessed at: https://rc.majlis.ir/fa/news/show/1757091
(in Persian
Schwartz, P. (1991). The Art of the Long View: Planning for the Future in an Uncertain World. Bantam Doubleday Dell Publishing.
Shekarkhah, J., Ghazinoori, S.S., Salimi, J. & Hedayati Bilondi, A. (2024).  Development of an Interpretive Structural Model for Key Drivers of Financial Sustainability in Pension Funds. Journal of Accounting Knowledge, 15(3), 21-46. 10.22103/JAK.2023.22321.3964 (in Persian)
Shekarkhah, J., Salimi, M.J., Ghazinoori, S. S. & Hedayati Bilondi, A. (2024). Identifying and Ranking Sustainability Evaluation Indicators for Iranian Pension Funds. Empirical Studies in Financial Accounting, 21(81), 53-95. doi: 10.22054/qjma.2023.76209.2503
(in Persian)
Shiri, M. & Daliri, S. (2021). Effective drivers of Iranian NGOs in the next decade. Interdisciplinary Studies on Strategic Knowledge, 5(17), 167-202. (in Persian)
Soleimany, A., Pourezzat, A. & Esmaeili Givi, M. (2020). Image formation about future of the Iranian social security organization through scenario planning. Defensive Future Studies, 5(17), 93-117. doi: 10.22034/dfsr.2020.130219.1404. (in Persian)
Taheiri Damneh, M. (2018). Sustainable Planning. Accessed at: https://iranianfuturist.com.
(in Persian)
Xiao, L., & Cao, H. (2017). Organizational resilience: The theoretical model and research implication. In ITM Web of Conferences (Vol. 12, p. 04021). EDP Sciences.
Yanez, S., Uruburu, A., Moreno A. & Lumbreras, J. (2019). The sustainability report as an essential tool for the holistic and strategic vision of higher education institutions. Journal of Cleaner Production, 207, 57-66.
Accounting and Auditing Review
Volume 32, Issue 1
2025
Pages 163-197

Files

Share

How to cite

Statistics