Iraq Pension Guide

Defined Benefit Pension — Formula

• Type — Defined Benefit: The Iraq pension system under the Retirement and Social Security Law No. 27 of 2006 is a defined benefit (DB) scheme. The pension is calculated based on the salary and the years of service.
• Formula: The retirement pension is calculated as: average of the last 3 years' salary × years of service × 2.5%. The average salary is the average of the highest or the last 36 months of the insurable earnings.
• Maximum pension: The pension is capped at 100% of the reference salary. The accrual rate of 2.5% per year means that the full pension (100%) is reached after 40 years of service.

For example: a retiree with a last 3-year average salary of IQD 1,500,000 and 30 years of service receives a pension of IQD 1,500,000 × 30 × 2.5% = IQD 1,125,000/month.

Retirement Age — Men and Women

• Men — 63 years: The normal retirement age for men is 63 years, with at least 15 years of service. Men who have 15+ years of service but are under 63 may not draw the full old-age pension.
• Women — 55 to 60 years: The normal retirement age for women is 55 to 60 years, depending on the specific category. Women require at least 15 years of service to qualify for the old-age pension.
• Minimum service — 15 years: Both men and women must have at least 15 years of service to qualify for the old-age pension under Law No. 27 of 2006.

For example: a female employee with 20 years of service at age 57 qualifies for the old-age pension.

Minimum Pension — IQD 500,000/month

• Minimum guarantee — IQD 500,000/month: The minimum pension under the Iraqi system is IQD 500,000 per month (approximately USD 340). If the calculated pension is below this amount, the pension is topped up to the minimum.
• Cost-of-living adjustments: The pensions are periodically adjusted for the inflation and the cost of living, although the adjustments are not automatic and require a government decree.

For example: a retiree whose calculated pension is IQD 350,000/month receives a minimum pension of IQD 500,000/month.

Early Retirement

• Men — 55 years with 20+ years of service: Early retirement is available for men at age 55 if they have at least 20 years of service. The pension is calculated using the same formula but may be reduced actuarially.
• Women — reduced age: Women may retire early under similar conditions, generally at age 50 with 20+ years of service, with an actuarial reduction applied to the pension amount.

For example: a 55-year-old man with 22 years of service may take early retirement with a reduced pension of approximately 80–90% of the full entitlement.

Survivor Pension — 50% to 75%

• Survivor benefit — 50% to 75%: Upon the death of the pensioner, the surviving spouse and the dependents are entitled to a survivor pension of 50% to 75% of the deceased's pension. The exact percentage depends on the number of the dependents.
• Eligible survivors: The survivor pension is paid to the surviving spouse (widow or widower) and the minor children. The adult children who are students may also qualify until a specified age.
• Duration: The survivor pension is paid for the lifetime of the surviving spouse and until the children reach the adulthood or complete the education.

For example: the widow of a pensioner who received IQD 1,000,000/month may receive a survivor pension of IQD 600,000/month (60%) if there are two dependent children.

KRG Pension Fund — Separate System

• Separate administration: The Kurdistan Regional Government operates its own pension fund, completely separate from the federal General Commission for Retirement. The KRG pension fund is administered by the KRG Ministry of Labour and Social Affairs.
• Similar rules: The KRG pension rules generally follow the same structure as the federal system (defined benefit, similar retirement ages, and similar contribution rates), but with the independent administration and the separate funding.
• Transferability: The transfer of the pension rights between the federal and the KRG systems is limited. A worker who moves from the federal Iraq to the Kurdistan Region may face challenges in consolidating the pension entitlements.

For example: a worker who contributes to the federal system in Baghdad and then moves to Erbil must check with both authorities whether the service periods can be combined.

FAQs

Can a foreign worker receive the Iraq pension?

Yes, a foreign worker who has contributed to the Iraqi pension system for the required minimum period may receive the pension upon reaching the retirement age. If the foreign worker leaves Iraq before qualifying, the employee contributions may be refunded as a lump sum (minus the employer portion), subject to the rules of the General Commission for Retirement.

How is the pension taxed in Iraq?

The pension income is generally subject to the Iraqi personal income tax (IIT) at the progressive rates from 3% to 15%, unless the pensioner is exempt under a specific provision. The public sector pensions may have different tax treatment compared to the private sector pensions.

What happens to the pension if the retiree moves abroad?

The retiree may continue to receive the Iraqi pension while living abroad. The pension is paid into a bank account, and the retiree should inform the General Commission for Retirement of the change of the address. The pension may be subject to the withholding tax depending on the remittance method.