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Pension contributions in Israel

Pension contributions in Israel Cabinet Expert Comptable Dray & Dray

When does my employer have to contribute to my pension in Israel?

Question

I am employed in Israel. I've been working in a call center for about 8 months.

  • How many months must my employer contribute to my pension in Israel?
  • I've heard that he doesn't have to contribute for the first 6 months of work. Is this true?
  • Does it make any difference if I already had a pension before I started working for this company?
  • Can my boss refuse to contribute to my pension?
  • I receive bonuses and commissions. Does my boss have to contribute for these too?

Answer

Thank you for your inquiry. Employers are obliged to make pension contributions for their employees from the 3rd month of service. The law passed in 2008 (compulsory retirement) grants a pension to all employees in Israel. It should be noted that pension contributions are retroactive to the first 3 months. An employer who fails to contribute to his employee's pension may be sued by his employee. There may be financial penalties important. This means that your employer cannot refuse to contribute to your pension. There is, however, one exception. If the employee has never contributed to a pension fund in Israel (Ole Hadash, first job etc...). In this case, the employer will only have to start contributing from the 7th month, and not retroactively. This is the only case in which an employer may not contribute to the retirement pension of an employee with more than 3 months' seniority.

Read also: the obligations of an employer in Israel.

We would also like to draw your attention to the fact that, in certain cases, bonuses paid to an employee working in a call center are still an integral part of the basic salary for the purpose of calculating pension contributions. Only exceptional bonuses (daily bonus, monthly target bonus, etc.) are exempt from pension contributions. We remind you that pension contributions are calculated as follows:

  • Retirement in Israel, employee contribution: 6%.
  • Retirement in Israel, employer's contribution: 6.5%.
  • Severance pay in Israel (Pitsouim): 6%. (In some cases: 8,33%).

Read also: How does retirement in Israel work?[/vc_column_text][/vc_column][/vc_row]

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Our consultants in Jerusalem

English speaking accountants in Israel
Address: Kanfei Nesharim 68. Merkaz Oranim
Phone number: 02 631 9000
Fax: 02 631 9005
Email: office@cpa-dray.com