Minister of Finance Benjamin Netanyahu and Knesset Finance Committee chairman MK Abraham Hirchson (Likud) today jointly presented to the Knesset a "pension for every worker bill" to be submitted for Knesset approval.
The mandatory pension bill aims to provide comprehensive pension protection to self-employed, non-union and low-income workers by directing savings to existing pension funds and Israel's capital market.
Under the pending proposal, every employer will be required to insure all salaried employed aged 25 and over, from the seventh month of employment. Every self-employed person will be required to take out income insurance not less than the minimum wage.
The insurance will be carried out through pension funds or insurance companies. The employer or self-employed person shall set aside no less than 9.5% of the insured salary, while employees shall pay up 7.5% at their discretion.
The bill will apply to all self-employed people who lack any pension arrangement and to all salaried employees workers for employers who have not made any pension arrangements for their employees under the age of 60.
Netanyahu and Hirchson agreed that the mandatory pension bill would gradually come into effect on January 1, 2005 over a period of five years. The employer's minimum contribution in the first year will be 6%, deducted from severance pay, increasing by 1% a year and by 0.5% in the final year, deducted from salary.
In the final year, the contributions will amount to 6%, deducted from severance pay, and 3.5%, deducted from salary, for a total of 9.5%.
Published by Globes [online] - www.globes.co.il - on December 16, 2003