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Minimum Pension 2008
  Minimum Pension 2008


The extension to the collective work agreement ratified by the government on December 30, 2007 introduces for the first time a requirement for employers to implement a retirement benefit plan for all employees effective from January 1, 2008 and subject to the following eligibility conditions:

 


 

Eligibility:


- men aged at least 21; women aged at least 20; and
- 9 months' employment at January 1, 2008 or later, reduced to 6 months' from 2009; or
- prior retirement benefit plan with previous employer (then without waiting period)

 


 

Covered salary:

basic salary up to national average earnings, 8,828 NIS/month correct for January 2013.

 


 

Contribution rates (including revisions):

 Year  Company 
 (retirement)
 Company 
 (severance)

 Employee 
 (retirement)

 Total
 2008  0.833%  0.834%  0.833%  2.50%
 2009  1.66%  1.68%  1.66%  5.00%
 2010  2.50%  2.50%  2.50%  7.50%
 2011  3.33%  3.34%  3.33%  10.00%
 2012  4.16%  4.18%  4.16%  12.50%
 2013 and thereafter  5.00%  5.00%  5.00%  15.00%
 2014 and thereafter
 6.00%  6.00%  5.50%  17.50%
 Standard plan (for comparison only) - market driven  5.00% - 6.00%  8.33%  5.00% - 7.00%  18.33% -  21.33%

 


 


Default plan:

Employees may select a provider and plan structure of choice.   Employees failing to instruct the employer regarding plan selection will be covered in a default post-1995 multi-employer pension fund as determined by the employer.


Contribution component to  severance pay fund:
according to these regulations (in accordance with Clause 14 of the Severance Pay Law):

• Severance pay contributions are not refundable to employer
• No supplementary employer payment will be required to cover the shortfall between accrued severance fund and the usual calculation based on final salary and years of service (this in respect of salary and service for which contribution are actually paid)
• The severance fund will be released to the benefit of the employee in all circumstances of termination
- also subject to other conditions