How to Read Your Israeli Pension Statement

Pension payment amounts can vary slightly under certain circumstances but is usually equal to at least 6.5% of the employee’s salary, plus 6% for Pitzuyim – פיצויים – severance pay compensation component. These payments are from the employer and are not deducted from the employee’s salary.

In addition, the employer must deduct an additional 6% from the employee’s salary for their pension but not for Pitzuyim. Altogether, this amount constitutes the monthly payment for an employee’s Pensia – פנסיה – Pension.

1. Each fiscal quarter and at the end of each year, you should receive a statement from the pension company that manages your pension.

It is important to review it to ensure that the Dmei Nihul – דמי ניהול – management fees you are paying are reasonable or that your funds are in an investment track that meets your needs. Additionally, employers can make mistakes, including not depositing their portion on time, in full, or at all.

2. Here is what a sample Israeli pension statement looks like. This example is from 2017 but is representative of statements in 2024 as well.

Statements usually provide helpful “bubbles” next to each section, alerting you what to look out for. We will translate and italicize each one for you below after the headers, where relevant.

We color-coded this example statement for your convenience. Match the colored boxes to the respective entries below.

Check that the insurance amounts meet your needs

In this section, you can see the projected monthly Kitzva – קצבה – payments you would receive when you retire if you stopped depositing into your pension today and never touched it again.

Since most Israeli pension plans also include a life and disability insurance component, this section also delineates the expected monthly payments that you or your family members would receive in the event of your death or disability.

If our example employee stopped depositing into his pension account and let it continue compounding until retirement, he could expect to receive 702 NIS per month at age 67.

In the event that the example employee dies, his spouse would receive 2,816 NIS per month, his children would receive 1,877 NIS per month, and if he has an elderly parent as a dependent, they would receive 704 NIS per month.

If the employee were to become temporarily or permanently disabled to the extent that he is unable to work, he would receive a Kitzva of 4,094 NIS per month. In addition, the insurance plan would pay his pension company 982 NIS per month to cover the monthly deposits that the worker and his employer aren’t paying during that time, thereby ensuring that when the worker retires, his pension will be available.

Notice the percentage you pay in management fees

This section reflects the annual activity in your pension for the reported fiscal year. The example employee started the year with 15,412 NIS in his account. Over the course of that year, 11,988 NIS were deposited into the account. He earned 2,200 NIS in interest and also transferred over 10,569 NIS from a previous pension account. He was charged 846 NIS in management fees, 146 NIS for disability insurance, and 324 NIS in case of death. He gained an extra 105 NIS because of an actuary recalculation. This left him with 38,962 NIS in his account at the end of the year.

The example employee is married with kids, but in the event that you are single and have no dependents, you can opt out of the life insurance component of this policy and save yourself the money. If you choose to do this, you will need to reconfirm this every two years.

The maximum management fees an investment company can charge as set by the government is 6% for deposits and 0.50% for savings, but they can be negotiated lower.

Pension companies tend to charge you fees on both your monthly contribution and annually on your total savings. The example employee is paying the highest management fees permitted by law, make sure to speak to your broker and have them negotiate lower amounts and periodically both you and they should check to make sure they haven’t changed.

This shows you which track you are invested in and by what percentage it grew that year. It’s important to note that you can choose how your pension is invested. The default is always the most conservative track so if you have several decades between now and retirement you should speak with your broker to determine the best investment vehicle to ensure maximum return.

Make sure these numbers match the sums that were actually deposited into your pension account. Use your Tlush Maskoret – תלוש משכורת – payslip for reference.

This section lists each of the worker’s deposits into his pension fund during that year. From right to left, the columns show:
(1) date of the deposit
(2) the month’s salary that this deposit is for
(3) his gross salary for that month
(4) his payment into his pension account
(5) his employer’s deposit into his pension account
(6) his employer’s contribution toward Pitzuyim
(7) the total amount deposited into his pension account.

The last, separate, line shows the pension deposit for December 2017 that was made in January 2018.

Everything in this guide is only explanatory and in no way should be considered advice of any sort regarding what you should or should not do regarding your pensions.

This guide was created and translated by Shivat Zion based on an article by the Fionist Dream. For the original post click here.