Retirement in Israel: everyone has to contribute
There are many pension funds in Israel, and unlike in France, every citizen must contribute to their retirement.
If you are an employee, your employer must open a pension fund for you.
If you're self-employed, you'll have to make your own contributions and use an insurer.
Contribute to your retirement, but at what cost?
When you contribute to your pension in Israel, the organization that manages your savings charges a management fee.
Management fees are the fees paid to the financial institution that manages your pension. This organization is responsible for making your savings grow, while taking a "commission" on your earnings.
This commission is called in Hebrew דמי ניהול, or literally Dmei Nihoul.
What management fees do we pay?
In Israel, we pay two types of management fees on our pension:
- Management fees on deposits This is a percentage deducted from each of your deposits.
- Management fees on accumulated capital This is a percentage deducted from the total capital accumulated in your retirement account.
Management fee ceiling
In Israel, there is a ceiling on the amount of management fees that can be charged by the financial institution managing your savings. The maximum percentage is :
- 0.5% of total accumulated capital.
- 6% of each monthly deposit.
Renegotiate now for your golden years
It's well known that in Israel everything is negotiated! The same rule applies to your management fees. So, thanks to renegotiation, for the same monthly savings, you can increase the amount of your pension.
Read this article to understand the importance of this renegotiation.
When can your management fees increase?
Here are some examples of when your management fees may increase:
- Cessation of insurance and pension payments by your employer.
- Withdrawal or partial transfer of your capital to another pension fund in Israel.
- Change of workplace. Management fees may vary depending on the benefits obtained at your previous place of work.
Important to know:
- Everyone can negotiate their management fees, and the savings are often considerable.
- Management fees also vary according to the type of investment chosen by the investor.
- The Ministry of Finance recommends taking the above considerations into account. So when choosing the type of investment for your retirement, think about choosing an investment that suits your needs. Don't rely solely on low, more attractive management fees.