Minister of Finance Moshe Kahlon has approved the recommendations of a team established to explore pension plans and unemployment support for independent contractors and the self-employed - who are not included in mandatory pension legislation. The team was led by Ministry of Finance deputy budget director Shira Greenberg and director general Shai Babad.
The recommendations will be included in legislation to be introduced in the Knesset in the coming months; once it is passed, the self-employed will be able to save for their retirement and receive financial support during times of unemployment.
Israel has close to 400,000 self-employed workers; senior staffers at the Ministry of Finance said the recommendations approved by Kahlon would affect the 90% of them who earn less than NIS 20,000 per month.
Self-employed people earning below NIS 20,000 monthly will make reduced National Insurance payments, and in return will pay part of their income into a pension fund. The team decided that two-thirds of the funds accumulated in the pension fund should be used for retirement savings while the remaining third should be made available to self-employed people in case of unemployment.
The self-employed will be entitled to unemployment benefit for three months, amounting to the higher of a third of the amount saved and three times the minimum wage.
Ministry of Finance officials said Thursday that implementation would reduce state revenue by NIS 200 million. The recommendations were formulated in consultation of various bodies representing self-employed workers, including the Israel Bar Association, the tax consultants association, and Lahav - the umbrella organization for independents.
“After many years of fruitless deliberations, the Ministry of Finance is offering a solution to provide for the self-employed public - which is ignored by the pension law - the basic rights and the safety net of pension savings and unemployment protection,” said Kahlon.
Lahav President Roy Cohen said the new framework “will avert the unfortunate reality that forces many self-employed Israelis to work until their dying day. We made sure Israeli independents will age with dignity.”
Babad and Greenberg said the Ministry of Finance would shortly hold meetings with the Ministry of Justice to discuss an enforcement mechanism to assure self-employed Israelis make the monthly payments to the pension plan.
Published by Globes [online], Israel business news - www.globes-online.com - on April 21, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016