Pension allowance for men retiring in 2018 cut by 0.6%

Ageing Photo: Shutterstock ASAP Creative

The decrease is a result of longer life expectancy. Women will not be affected.

The pension allowance for men retiring after January 1, 2018 will be cut by 0.6%, as a result of the lengthening of life expectancy over the past five years, according to a revision of the mortality and morbidity tables. The revision will not affect women retiring after January 1, 2018, because the increase in women's life expectancy over the past five years was relatively small.

The Capital Market Authority, headed by Dorit Salinger, today published the findings of its research for revising the pension funds' demographic assumptions, based on the revised mortality and morbidity tables, as of January 2018. The Capital Market Authority revises the tables once every five years. The current revision worsens to some extent the situation of new retirees, because life expectancy is longer, which reduces the monthly allowance for new pensioners. In addition, the current revision shows that the costs of the insurance risk for loss of earning power have risen. In the preceding revision in 2013, the costs of insurance against disability risks fell dramatically.

The cost of coverage for the mortality risk should fall by 25-30% for active pension holders, while the cost of coverage for pension holders' disability risk will rise by 90% for women and 130% for men. It is important to note that the changes will not be very significant for savers, because up until now, the pension funds have collected the differences at the end of the year. A larger payment was taken from those with larger balances, who in effect subsidized savers with lower balances. On the other hand, the amount paid at the beginning of the year by savers with a low risk of becoming ill or dying was lower. These are mostly younger savers whose savings balances are lower, so the differences offset each other.

Published by Globes [online], Israel Business News - www.globes-online.com - on September 7, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Ageing Photo: Shutterstock ASAP Creative
Ageing Photo: Shutterstock ASAP Creative
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