The Histadrut (General Federation of Labor in Israel), the Presidium of Israel Business Organizations, and the Manufacturers Association of Israel today agreed on a 1% increase in pension contributions. The discussions culminated in the signing of a collective agreement that will increase contributions to pension insurance over the coming year, thereby increasing the accrued amount for workers' pensions by thousands of shekels.
According to the new understandings between the Histadrut and the Presidium of Israel Business Organizations, employers' payments to the pension fund will be raised from 6% to 6.5% of the employee's determining income. The employee's contribution will also be increased by 0.5% - from 5.5% to 6%. The overall rate of contributions to the pension payment element will rise by 1%, and the total contributions (including the compensation component) will increase from 17.5% to 18.5%. This will be reflected in an increase of over 5% in the amount accrued to the employee's benefit at retirement age.
The process will be concluded in less than a year, in two steps: one 0.5% increase this July, and another on January 1, 2017.
Histadrut chairman Avi Nissenkorn said, "Today, we took an important step in improving economic security and ensuring a dignified living for every Israeli, including after pension age. This measure, which is in effect a historic revision of the compulsory pension agreement, will increase pension savings for each worker by thousands of shekels. I thank (Presidium of Israel Business Organizations chairman and Manufacturers Association of Israel President) Shraga Brosh for his cooperation is reaching this agreement, and I also thank Knesset Finance Committee chairman Moshe Gafni and MK Miki Zohar for their contribution to the process."
Brosh added, "I am glad that we increased the pension savings of workers in Israel, while also preventing a burdensome added cost caused by the government's irresponsible legislation. There is a limit to the business sector's ability to absorb additional costs of employment, and we have reached this limit. Continuation of the dangerous trend of providing added benefits through irresponsible legislation will detract from the business sector's ability to generate new jobs, harm growth, and sharply increase unemployment in the coming years."
Published by Globes [online], Israel business news - www.globes-online.com - on February 23, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016