International Journal of Nonlinear Analysis and Applications

Parametric reforms in the PAYG pension fund using automatic balancing mechanisms (a case study of Iran Social Security Organization)

Articles in Press

Document Type : Research Paper

Authors

Department of Economics, Faculty of Economic and Administrative Science, Ferdowsi University of Mashhad, Iran

Abstract

The phenomenon of population ageing and non-compliance with the existing laws of the social security pension fund is a great threat to the financial stability and existence of this fund, which indicates the need to correct it even more. This research aims to present the optimal strategy of parametric reforms in the form of different hypothetical scenarios for the reforms of contribution rate, retirement age, and replacement rate reduction in the framework of automatic balancing mechanisms. The data analysis and collection are based on the optimization results of the non-linear model in the MATLAB software environment using ultra-heuristic algorithms of crystal structure and particle swarm. The findings of the research indicate that restoring the stability of the fund in the future 20-year horizon requires a gradual increase of 9 years in the effective retirement age. But this process can be combined with a policy of increasing the contribution rate by 9% or reducing the replacement rate, only requiring an increase of 5 years in the retirement age. Therefore, adopting the policy of reducing the replacement rate and gradually increasing the contribution rate, along with increasing the retirement age, will reduce the trend of increasing the retirement age in order to maintain the stability of the fund.

Keywords

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International Journal of Nonlinear Analysis and Applications

Articles in Press, Corrected Proof
Available Online from 14 December 2025
  • Receive Date: 06 November 2023
  • Accept Date: 30 January 2024