Keren pensia or Bitoua'h menahalim?

KEREN PENSIA (pension fund) or BITOUA'H MENAHALIM (management insurance contract)?

I continue my series of articles on retirement in Israel by now addressing the specifics of the two retirement account options available to salaried employees.

The old-age allowance in Israel When a person reaches retirement age, 64 for women and 67 for men, they receive the "Old Age" allowance paid each month by the Bitoua'h Leumi. This allowance currently amounts to 1,531 shekels per person. Unfortunately, this insufficient sum explains why, in Israel, many people continue working past retirement age, often as security guards or in cleaning companies. For many, it is a matter of survival.

This situation is particularly common among olim who came from

Ethiopia, Ukraine, or Russia. They receive no pension from their country of origin and did not have time to build up a sufficient retirement account in Israel. On the other hand, those who were fortunate enough to be born in Israel or to arrive when younger can open a retirement account with a Keren Pensia (pension fund) or a Bitoua'h Menahalim (management insurance contract).

Choice and contributions

Whatever option is chosen, the law requires the employer to contribute 18.5% of the gross salary each month. Six percent of this contribution is deducted from the employee's net salary. The choice of a serious insurance broker is essential to advise on the investment channel to choose. In addition, the broker verifies the employer's monthly payments and ensures regular follow-up.

Keren Pensia A Keren Pensia

is an autonomous entity, generally affiliated with an insurance company. Its operation is governed by strict internal regulations. However, its operation can undergo unforeseen changes, similar to the benefits of the Kupot Holim which change regularly.

Each year, the accounts of the Keren Pensia are verified to ensure they are in balance. In the event of an imbalance, the fund can go bankrupt, as happened in 1997. At that time, the State intervened to save the fund and guarantee at least a partial payment of pensions.

In the event of incapacity to work, the conditions for receiving benefits (75% of the declared gross salary) are restrictive. The employee must be incapable of holding any position whatsoever. In the event of death, only the spouse or children under 21 years of age can receive 60% of the expected pension over a period of 20 years.

Bitoua'h Menahalim Unlike

the Keren Pensia, the Bitoua'h Menahalim is a firm and definitive contract at the time of signing. It is not subject to changes. This contract forms an integral part of the insurance company and offers greater stability.

In the event of incapacity to work, it is not sufficient to be capable of holding just any position. The position must correspond to the employee's experience, professional training, and level of education. To receive benefits, a sick leave of a minimum of 91 days is required. There is a retroactive payment of 75% of the gross salary from the 31st day.

In the event of death, a life insurance amount is built into the contract and paid to the beneficiaries stipulated at the time of signing. This includes partners and children, regardless of their age.

In conclusion, every day brings its share of surprises when examining retirement files. Even with employers paying regularly, it sometimes happens that previous agents did not do their job correctly. Sums may remain in limbo or be incorrectly allocated. These sums therefore do not reach the employee's retirement account.

For any additional information, please contact me directly at 054 307 0916 or by filling out the form below.

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