Towards an Inclusive, Equitable and Sustainable National Pension System in Iraq

Analytical Notes, April 30, 2024

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Towards an Inclusive, Equitable and Sustainable National Pension System in Iraq

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Bibliographic details

• Published: April 30, 2024
• Series: Analytical Notes
• DOI: https://doi.org/10.5089/9798400269288.064

Overview

• A pension system is at the heart of social protection by ensuring income security for older persons and other vulnerable groups, preventing poverty, reducing inequality, and facilitating consumption smoothing.
• Pensions influence labor market choices and have important fiscal implications.
• Iraq’s current pension system is described as highly fragmented, inequitable, and inefficient.

Key findings

• Coverage and adequacy
  • The current system fails to provide adequate income protection to most of Iraq’s old age population and other vulnerable groups, such as survivors and persons with disability.
• Fiscal sustainability
  • The public sector pension is already putting substantial pressure on the budget and is potentially unsustainable given the projected acceleration of the total pension bill due to recent policy changes.
• Labor market and structural implications
  • The pension system sets an uneven playing field between the public and private sectors, contributing to the continued expansion of an already outsized civil service.
  • This dynamic is holding back economic diversification and private sector growth.
• Overall assessment
  • A comprehensive pension reform is urgently needed to address fragmentation, inequity, inefficiency, coverage gaps, adequacy shortfalls, fiscal pressures, and adverse labor market incentives.

Reform objectives and proposed approach

• Collaborative authorship
  • The policy note is based on collaboration between the IMF, ILO and the World Bank.
• Primary aims (as stated)
  • 1) Provide an assessment of the existing public and private pension system across the four dimensions: fiscal sustainability; labor market implications; coverage; and adequacy of benefits.
  • 2) Develop and propose options to adjust the pension system with a view to making it fiscally sustainable, more inclusive and adequate, and conducive to private sector development and labor market formalization.
  • 3) Provide a basis to engage key stakeholders—including workers, employers organizations and the civil society—on strategies to achieve a more inclusive system, importantly by including workers in the informal economy, female workers, workers with disabilities, and other disadvantaged groups.

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