January 23, 2017
Take care of your retirement from a young age, and the dress again! You can't even pull a pension out of the pond without effort! Under a lying stone and the pension does not flow! Sit down, old and young, but listen - a pension in Israel!
Disclaimer. This article is for reference only and is in no way an indication of any action. I am not responsible for your transactions with your pensions, and you make all changes in the current state of affairs at your own peril and risk. For professional advice, it is worth contacting a trusted pension consultant. This article does not advertise any pension consultant.
Why such a sinister disclaimer? The fact is that while we are young and capable, everything can be fixed. Offensive, but solvable mistakes with buying a car or taking a loan. Mistakes with the acquisition of an apartment seriously hit life, but they can be overcome. The pension falls at the age when the capacity and activity decrease exponentially, and the difficulty of correcting errors in the provision of old age and the size of pensions increases exponentially.
I reveal this topic as I understood it after talking with pension consultants and attending seminars. To whom is it intended? Oddly enough, not only quite adults and the elderly, but people of all ages. It works in such a way that the sooner you take care of it, the better the result will be in the end. But before any action, double-check this and any other information a million times.
The topic is boring, the article is planned to be of a decent size, but I will try provocatively, with preference and courtesans. In addition, in order for you to have the opportunity to read the theory for free, I paid for this information both with money and a considerable amount of my time. I don’t think that I can ask to pay something to me, but anyone who wants to thank on their own initiative will find at the end of the article a block with information on how to give a “cup of coffee” and help the project. Go.
Why are there no pensions in Israel?
The problem is that since 2013 there has been no pension in Israel. But since I always write according to the Hollywood script, you, of course, understand that the main character cannot be shot at the very beginning of the film. The maximum is to shoot into soft tissues. So who was shot where? To understand this, it takes a little theoretical-historical excursion.
The French military was the first in history to think of retirement during the French Revolution. In a free translation, they came to the new revolutionary government and said: “We fought here, the tsar was thrown down, the Bastille was taken, they did not spare their lives. Throw us Chardonnay and cigarettes in old age. This was several centuries ago, and since then, in different countries, in one way or another, the authorities and people have thought about the fact that the elderly need to live on something.
In Israel, of course, they thought of this too. Until the 1970s, approximately 70% of Israelis worked in the public sector. They were entitled to a state pension, which was called "pension taktsivit" ("taktsiv" - the budget). It depended on the length of service and was calculated as follows: for each year of work, 2% of the salary was supposed. The maximum percentage of the pension was 70% of the salary (which is equivalent to 35 years of service). In other words, if my salary was 10,000 shekels, then the pension would have been 7,000. Such a tactic pension continued to exist in some industries until 2013.
In the 70s there was a "bourgeois revolution", and collective agreements appeared. Now the employer had to deduct a certain part of the savings funds, from which the pension was then formed. These funds are called "kupot gemel". Transferred money there only employer; the worker did not list anything and dreamily imagined how, at the age of 70, he would go on a round-the-world trip to Israel. Upon reaching retirement age, the employee received all the money at once.
In 2008, there were two significant moments. Many will immediately think that the crisis. It happened, of course, but it just happened. So in 2008, specially trained people considered that the young people who arrived in the 60s were inexorably moving towards the autumn of the century they were allotted, and this pension had to be paid. Where? There is no money, as always. At this rate, by 2026, the Israel caterpillar crawling in spite of everyone will pupate, undergo a miraculous metamorphosis and turn into into a bankrupt butterfly. And all the inhabitants will have to fly away beautifully into the sunset.
The second moment is no less beautiful. Since that pension fell into the account in a single amount, then imagine what began to happen. A man who has received 10,000 shekels all his life comes to the bank and discovers a jackpot of 2,000,000. It took such a person on average from six months to two years to lose the preference and lose all two million. When the last courtesan fled from him, he went to Bituah Leumi. And everyone became very sad: the pensioner, because he had to get himself a subsistence allowance, and the uncles and aunts from Bituah Leumi, because the villa in Caesarea would not build itself, but all sorts of people go here.
Until thunder struck, reforms were carried out: not only employers, but also employees begin to transfer money to the kupot gemel, and the pensions themselves are transferred to the recipients not in one piece, but in payments. State pensions were abolished. The last to leave them were the army in 2013 (I can be wrong about historical facts, correct if you know more precisely).
So, there is no state pension in Israel. But what is present?
How is a pension formed in Israel?
First source— Bituach Leumi. This is a state insurance company. Retirement age is an insured event. If you, like me, are a man, and you are lucky enough to live to be 67 years old, then 1531 shekels is your cookie for a happy old age. If you're a woman, you'll get a cookie at 64. Don't nitpick about the numbers, there are those who still retire at 62 and are now actively thinking about raising the retirement age even more, because we live too long.
Why is this not a pension? Because this is an old-age allowance (kitzvat zikna), and how can 1531 shekels be called a pension? But not everything, of course, is so simple. To get this butter for bread, you need to fulfill the condition. Have a minimum experience. Or 60 months over the past 10 years. Or 144 months during the entire stay in Israel. For those who came to Israel already at the pre-retirement / retirement age, there is kitzvat zikna meuhedet (meuhedet - special). It does not require experience, but there are many restrictions.
In addition, for each year in excess of experience 9 years(since 2017; before it was over 10 years) you can get 2% bonus and increase 1531 shekels to the maximum 2250 shekels(i.e. 50% of the amount).
Life hack. In order to avoid problems with Bituah Leumi, it is advisable to keep your pay slips (mascort) and 106 forms until retirement. Of course, your relationship with employers for Bituach Leumi is usually transparent and stored in their databases. But if suddenly something happens to their bases at the time of your retirement, then it will be categorically difficult to prove something to someone without pay slips and 106 forms. Therefore, we print the leaves, put them in a file, a file in an egg, an egg in a duck, a duck in a hare, and so on ...
So, at the moment, in a good scenario, we have 2250 shekels, which should brighten up our nostalgia for youth. But they can also be increased. The state, which is interested in not giving them to us, says: “Old man, don’t take this money! If you do, for every shekel you earn over 5,000 a month, we will cut your allowance. That is, if you have a monthly salary of 7,500, then you lose your benefits altogether, you know?” And we, although already old, but not yet in dementia, answer: “Of course, we haven’t graduated from gymnasiums, but so far it sounds bad. What is our benefit?" To which the State, slyly squinting and rubbing its cold, bony hands, replies: “If you don’t take this money before 70 and don’t play box on the way, then for each year of delay you get another 5% bonus of this amount.”
Moreover, 70 years is generally a very important date in the life of every citizen of Israel. And not because you can be glad that you have lived to these years. Although I would be very happy. And because at this age it becomes unimportant how much you earn in order to receive this allowance (although for some reason it seems to me that at this age a lot is already unimportant). For example, in 2015, the CEO of Bank Leumi received approximately 675,000 shekels per month, according to googling information. So, if she were 70 years old, she would calmly go to Bituah Leumi and ask to give her 2250 shekels (plus a 5% bonus for each year that she did not take this money) for pocket expenses. Let's wish the director long life and move on.
This money will be paid to you even if you live in another country. With the proviso that Israel must conclude an agreement on social contributions with this country. That is, if in your old age you want to be closer to your grandchildren and slightly infuriate children living in Canada with your insanity, then there is no problem. Move to Canada and get your legitimate 2250.
That part is dealt with. Bituach Leumi pays us for an insured event.
The second source are deductions. The same deductions that the Ministry of Finance has obliged us to make since 2008.
For 2017, these deductions are 6.5% of the salary from the employer and 6% from the employee. This is called "tagmulim". And here comes another 6%, deducted by the employer, which are called "pitsuim" - money for dismissal.
Here, by the way, there is the following rule: if you quit yourself, then you get this money in exactly this proportion, and if the employer fires you, then he is obliged to pay another 2.33% to “pitsuim” for each month from the moment you start working. But here the employer has tools to facilitate payments to himself. For example, he may pay interest not on 100% of your salary, which includes the salary itself, extra hours, trips, bonuses and other goodies, but on 70%. It all depends on your contract with the employer, so bargain, ask, focus, “what about compote?”
This money can be transferred to the following funds: either “Keren Pension”, or “Kupat Gemel”, or “Bituah Menaelim”.
What are the differences?
First of all, kupat gemel and keren pension are group agreements. The advantages are that the percentage for service is always lower than in individual contracts. Cons - the conditions provided are valid for a certain period of time and can always change.
Bituach menaelim is a personal contract. The downside is the high service charge. Plus - the conditions provided are ironically preserved until the termination of the contract. The deductions in bituah menaelim are 5% from the employee, 5% from the employer, and 8.33% from the pitzuim. Since 2013, bituah menaelim has been a very unprofitable tool for accumulating pensions.
Let's make a table for clarity (the percentage of deductions is the deductions of the employee + deductions of the employer + maximum pitsui):
It becomes clear from the tablet that bituach menaelim is not profitable at all now, but we will insert a remark below.
Mecadem
There is such a thing - mekadem. In other words, a divider. When you reach retirement age, and you have, say, a million shekels of pension contributions accumulated, they will be given to you in payments. What payments? Who and how decided how the pension is paid in Israel? For this, a mekadem is used - a coefficient by which all deductions will be divided and the resulting amount will be paid monthly. Mekadem depends on the average life expectancy. Today, boys are 78 years old and girls are 85. The insurance company calculates and pays. If you left this world before your retirement savings ended, your heirs will receive them. If later, payments do not stop, the insurance company continues to pay. Therefore, insurance companies calculate the divider in such a way as to pay you exactly your savings and not start paying out of your own pocket. Today, the mekadem is approximately 240. Some time ago it was less - 200. Even earlier - 180.
It was then that the bituach menaelim was very profitable. Since this is an individual contract, the mekadem remains fixed for you, and you knew exactly how much you would receive in retirement. Exactly on January 1, 2013, insurance companies realized that the owners of bituah menaelim live very curly with such a fixed mekadem, and closed the shop.
Dmey niul
There are two types of them:
- dmey niul mi aucada(commission from transfers)
Keren has a maximum pension of 6%. This percentage is taken as a one-time fee. - dmei niul mi hisahon(commission from savings)
Keren has a maximum pension of 0.5%. This percentage is taken from all savings constantly, every year.
What to do with these percentages? Reduce. Bargain like a berserker with an insurance agent, fight like a gladiator. What is the most important to reduce? Intuition suggests that 6%, but the question is a trick, so we, quickly orienting ourselves, answer that 0.5%, and we are right. Why? Obviously, because we don't want large commissions to be deducted from the money for which the commission from the transfer has already been paid.
How to trade? As an everywhere. Call other pension companies, find out where they are ready to offer more favorable conditions. Go to your current insurance agent and say: “Izya, do you know that Shmulik offered me conditions twice as good as you offered?” If the insurance agent catches on and: “Wait, brother, don’t boil, here’s half the interest for you, look what cake I baked for your visit, I’m sorry, I was wrong,” then everything is fine. If the insurance agent turns out to be a bad person or even a radish, you need to be ready to courageously leave.
life hack. In 2016, a situation happened from the category of “there would be no happiness, but misfortune helped.” The fact is that the Ministry of Finance loves the citizens of Israel. Of course, first of all, it loves itself very much, but it so happened that it is hard to love yourself without loving others. They really do not want people to go to Bituach Leumi. So much so that every time someone comes there, somewhere in Israel, an employee of the Ministry of Finance cries. Therefore, they announced a competition between pension companies to provide minimum commissions for pension contributions and savings. The tender was won by two companies: Alman Aldobi and Meitav Dash.
Both companies have pledged to provide the lowest commissions on the market for the next 10 years. They managed to do this due to the fact that they do not work with agents, but communicate directly with customers. Therefore, it makes sense to think about moving to them for the next 10 years, but (!) be sure to consult with trusted pension consultants before taking such actions.
More life hack. In the tablet, the bottom line concerned insurance. Of course, money is also paid for these insurances. And here it is worth approaching this wisely. If you are a loner, and no one depends on you, then why do you need life insurance, for example? Who is your heir? If you don't have a wife and pineapples, then why have insurance for your wife and pineapples? If the company considers disability as 75%, then what is the need for disability insurance if it is provided by Bituah Leumi? All this should be clarified in a conversation with a pension company or with a pension agent and get rid of or vice versa add the necessary insurance.
Maslyulim
This is an important term in understanding how a pension is formed in Israel. Let's start by asking ourselves what happens to the money that we deduct from our salaries. They do not accumulate in a large safe under reliable protection. Instead, they end up in an equally large cauldron of the stock market. And they start working there.
If you know what the stock market is, then the unsettling realization immediately comes that our money is not particularly protected. That is, the crisis sank, stock exchanges fell, in the refrigerator instead of red fish there were cheap sausages. By the way, this happened in 2008, when the same crisis happened. The people who retired that year were very unlucky.
And this is where the term comes into play. butter(in the plural - maslyulim).
Maslyul is, so to speak, the route by which money gets to those same stock markets. The stock market can be very roughly and simplistically represented as in the picture below.
He, the market, consists of bonds and stocks. Bonds are called "agrot hof" in Hebrew, and the abbreviation AGAH is often used in speech. Bonds are debt obligations. For example, the State of Israel urgently needs money to enclose the peace-loving you-know-who from their Zionist aggression. The state goes to the United States or to its inhabitants, asks for money, and in return gives bonds. Every year on these bonds he promises to pay interest, and after a certain number of years to return the amount borrowed. Their liquidity in the markets is low, the interest on them is small, so they are considered to be a solid instrument.
Shares are also securities. They give the owner the right to participate in the management of the company that issued these shares. When you buy one share of Apple or Yossi's Falafel, you become a co-owner. You can even receive dividends (part of the profit). The liquidity of the shares is high and the risks are high. For example, when the iconic third iPhone came out, Apple shares skyrocketed. When Shmulik opened a falafel shop across from Yossi's Falafel and started offering free pita and ear scratches for falafel, Yossi's stock fell threefold. This is a risky tool.
And that same oil determines in what proportion the pension money goes to the stock market. It is very safe to throw 100% of your money into bonds. It is very risky to throw 100% of your money into stocks. Those or other proportions in the middle are exactly what you need to follow and what to approach wisely.
If you and I slammed - and very often it happens that we slammed - then the money ends up in oil, they put: up to 70% - bonds and up to 30% - stocks.
If at the same time we are 50 years old, then everything is not so bad. More than 10 years before retirement, this 30% stake is a risk you can afford. If we are 67, and the year is 2008, then with a high degree of probability we are left without 30% of the money and instead of tasty treats for lunch, we suck a paw.
The state took care of such slapping people (well, so that we would not decide to visit Bituah Leumi for a subsistence allowance), and adopted the “Chilean system”. It consists in the fact that the closer to retirement age, the more solid oil becomes - fewer stocks, more bonds.
But if you are responsible, then you have all the tools in your hands to decide how your money will work. If we take the same crisis of 2008, now in 2017 no one will remember it. Stock exchanges have grown, the situation has improved. Therefore, knowing that you still have 40 years before retirement, it is quite possible to afford the maximum risk (maximum stocks, minimum bonds) for the next, say, 10 years. This will bring the maximum interest from the money working on the exchange. After 10 years, the risk can be reduced by choosing a slightly less risky oil, and so, approaching retirement, gradually increase the share of solid instruments in your “portfolio” and reduce the share of risky ones.
You can go even further. If you really understand how the stock market works, have the necessary experience, tools and knowledge, then you can come to a pension company and say: “I can handle it without snot.” You sign the necessary papers and get your pension money at your complete disposal with the ability to decide where, how and how to invest.
Personally, I don’t understand anything about this, so I prefer not to do such acrobatics. By the way, usually pension companies do not buy any specific shares. Rather, indexes are bought. For example, the Tel Aviv35 index. This is a kind of average index of the 35 largest companies in Israel, in which these companies somehow balance among themselves. One company's shares rose - the index rose, another company's shares fell - the index fell, several companies' shares rose and fell - the index changed to a certain delta.
So I understand it very simply. If there are people in the commentators with deep knowledge in this area, and factual errors hurt the eyes, correct me.
At this stage, the stereotype that we do not manage anything and do not influence our pensions should disappear forever. In Israel, there is an opportunity to influence your savings and their size as much as possible. And at the same stage, there should be an understanding that we need responsibility and self-organization in order to control what happens with our deductions with a certain frequency.
Another life hack until I forgot. On Facebook, they always ask if you have picuim, and if you have, they definitely advise you to take them. So, if we go back up the article, we see that pitsuim is actually a third of the pension. It's not worth taking them unless absolutely necessary. Simply because you should not deprive yourself of a third of your pension.
And another note. Since a person, as a rule, changes more than one, not two, or three in his life, the phenomenon of pension money “hanging” somewhere is very common. Well, if something is lost somewhere, then there will always be kind guys who will help you find it. On the same Facebook, stories often circulate about how some people turned to someone and said that they would find the lost pension money. They asked me to sign a contract that from what was found, let's say 30% would be paid. Without much thought, a person signs, and when 200,000 shekels are “found” for him, he is horrified that a third of his money needs to be given away.
After all, money was not really lost and you can get all the information about pension savings on the state website swiftness.co.il. It costs 40 shekels. In addition, there is a site where you can find your funds with non-performing savings. It’s just that people often don’t know about it, or they are lazy and afraid to figure it out. In fact, even a pension consultant will take all the data about you from the first site, tell everything and give advice, but not for a third of the “found” money, but for some hourly rate.
Pension report
Once a quarter and at the end of the year, we receive reports on our pension affairs from pension companies. Below I will attach a sample photo of what they look like. If the article hits 50 shares on Facebook, in other words, it turns out to be really useful and interesting to people, I will supplement this pension report with explanations of what we see on it. Here, by the way, it is noticeable that dmey niul is wild. This is because the type of pension is bituach menaelim.
How are pension baskets opened?
Firstly, according to the law, no one has the right to impose on you some kind of pension company and type of pension contributions. If you casually wave your paw, then the employer will call you an agent of the pension company with which he works. Everything will be opened to you, signed and, most likely, they will carefully begin to lick off the highest percentage of commissions allowed by law.
But you have the right to point your finger at a specific company and say that you are interested in a keren pension or kupat gemel. And no one has the right to object.
You also have the right to specify the specific insurance agent with whom you want to work, and not the employer.
Secondly, if you didn’t have a pension program before, and this is your first place of work, then they will open this whole case for you six months after starting work. After the opening of deductions for the past six months, there will be retroactively. That is, as a result, these six months will not remain without pension contributions.
At each next place of work, the pension program opens at least 3 months after starting work and similarly retroactively.
Here, too, you need to be careful, because they may not ask and write off all pension contributions for the past (six months in the first case) three months at once from the salary that has gone in. If the salary is small, and you were not ready for this, it can hit the budget for a month, bland biscuits instead of a juicy steak, and so on. But everything can be broken down into payments, showing vigilance in advance.
conclusions
That, in fact, is all that I managed to remember on this topic. All of the above leads to the following conclusions: a pension in Israel makes a person be responsible. If you let everything take its course, then "you can end badly," as they say. We have to bargain for commissions, decide whether to take risks and earn high interest or not risk and earn small interest. This is everyone's personal decision. We need to remember that pitsuim is part of our pensions, that pension programs do not open immediately, and that you need to check pension contributions in the same way as we check a bank account for a salary that came in at the beginning of the month.
Well, of course, ideally, you need to have your own money for old age, because pensions are pensions, programs are programs, and it will never be superfluous to take care of yourself.
If there were gross errors in the article, I very much welcome constructive comments and corrections, preferably with references to the letter of the law. I am learning with you.
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