Mandatory Pension law

The mandatory pension law was recently updated (Sept 7, 2010).
Originally planned for gradual annual updates from 2008 – 2013, when the mandatory % will reach 15% (5% employee, 5% employer and 5% severance pay -employer)

The new revision now ads another year (2014).
Starting Jan 1, 2014 the mandatory pension will be 17.50% as follows:
employee – 5.5 %
employer – 6.0 %
employer (pension) – 6%

The mandatory pension revision also specifies:
1) that it applies to employees who retired at retirement age and receive a stipend from social security (Bituach Leumi).
2) An employee who begins work at a new place of employment and is insured in a pension plan from his previous place of employment, will be eligible to receive continuation of the existing plan and it’s percentages from day one with the new employer, provided there is no break in monthly payments. If there is  a break, the mandatory pension law will apply.

see the full wording of the original mandatory pension plan here:

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About motal7

Israpay was founded in 2009 with the goal of helping Anglos better understand Israeli labor laws. Whether you are an employer or an employee it is imperitive that you understand what employee's rights are. If you are an employer this will help you avoid possible lawsuits in the future and/or legal sanctions by the Ministry of Industry, Trade and Employment's Administration of Enforcement and Regulation dept. If you are an employee, it is imperitive that you know what your rights are and how to read your payslip. Israpay has vast experience in setting up and implementing payroll departments and procedures for companies to suit their needs. private consultation is available to both employees and employers.
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4 Responses to Mandatory Pension law

  1. Avatar of motal7 motal7 says:

    In answer to David:

    I need to be a bit more explicit on this. thanks for the heads up question.
    If a new employee was not previously insured in a bituach menahalim or pension program, or his previous insurance is “inactive” (meaning that there was a lapse between the last month he/she was insured and the first month of work for you) then the mandatory pension law applies in full. If the employee continued the policy on his own after leaving previous place of work (risk) this keeps the policy alive and you would need to continue it as it exists – see below.

    If the employee has an active plan and there is retzef – example: he worked for company A with a pension plan until 30/04/2010 and started work with you in May 2010 – you need to continue the existing plan with it’s existing percentages.

    This is easily done. ask the employee to show you a printout of the statement from the pension company (this can be obtained on-line immediately) they also send out quarterly reports to every member.


  2. Avatar of motal7 motal7 says:

    Yes it does, Also if the policy from the previous place of employment had higher percentages than the mandatory pension plan, the new employer would need to continue the previous plan and it’s percentages. This of course is provided that the previous policy is still “live”, or continuous.

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