The Bank of Israel's pension commitment to its employees has shot up by NIS 2 billion, or nearly 50%, as a result of a change in the actuarial calculation. This means that the average value of a Bank of Israel employee's unfunded pension package is now some NIS 6.5 million, or NIS 40,000 monthly. Under the collective agreement with the bank's workers, anyone who started work at the bank before September 2002 is entitled to this extraordinarily generous pension.
The Bank of Israel's financial statements released yesterday show that at the end of 2015 its pensions liability to its employees and pensioners was NIS 6.243 billion. In the 2014 report, the figure was NIS 4.332 billion. In the current report, the 2014 figure was recalculated on the basis of the change in calculation assumptions, and rose to NIS 6.306 billion.
The number of people entitled to a pension from the Bank of Israel at the end of 2015 was 966, 271 of them active employees and 695 pensioners or their spouses if deceased.
The rise in the pension commitment stems from a reduction in the capitalization rate applied to the provisions the central bank has made for pensions from 4% to the equivalent of the annual net yield on fixed-rate ten-year government bonds, currently 1.1%. This means that more money has to be put aside in order to obtain the same future amount to meet pension liabilities.
Published by Globes [online], Israel business news - www.globes-online.com - on March 23, 2016
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