Investigating Investment Approaches in Pension Funds: The Case of Iran Social Security Organization

For nearly nine decades, the concepts of retirement and benefits of employment saving for the elderly period have been introduced in the context of various pension funds in Iran. In this regard, the Social Security Organization, as the largest pension fund in the country, has great social importance. On the other hand, this organization, with one of the largest financial reserves, is also of great economic importance. Therefore, asset - liability management is of particular importance so that it can guarantee existing resources for current use and repay future liabilities for future years. To this end, it is important to take the right investment approach. In order to pathologies and analyze this issue, in the present study, the cash flow of revenues and expenditures of the organization along with its specific features and requirements for the period 2010-2017 was analyzed. Then, the requirements for adopting active or passive investment approaches and outsourcing or introspection in investment management of the organization''''''''s reserves and global experiences were introduced and the current approaches of the organization were evaluated. The results imply that the current approach of the organization is passive and without any outsourcing in investment management. At the same time, the results indicate that it is difficult to take an active approach in the current situation due to the low depth of the financial market, inappropriate business environment and high government prevalence on the Social Security Organization.