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Mandatory pension contributions for employees will rise by one percent

The Chairman of the «Histadrut» AVI Nissenkorn and President of the businessmen Association, Shraga Brosh, announced at the meeting of the Finance Committee of the Knesset that the pension deductions for employees will be increased by one percent. During the meeting the parties signed the collective agreement, which States that the increase in pension contributions will occur in the coming year. This would increase pension savings by the time retirement on thousands of shekels.

In accordance with the new agreement between the «Histadrut» and the Association of entrepreneurs, the employers ‘ contribution to pension Fund will increase from 6% to 6.5% of the current salary of the employee. The amount of deductions the employee will also increase by half a percentage point — from 5.5% to 6%. The calculation will be based on the basic salary and all fixed allowances to the salary (according to the law on compensation for dismissal)

Overall, the pension deductions will increase by one percent, and the total amount of deductions (including deductions to compensation for dismissal) will increase from 17.5% to 18.5%. This will lead to an increase in the amount accumulated by the employee to retirement, more than 5%. The increase will be carried out in two stages: in July, the deductions will increase by 05%, and a further 0.5% from 1 January 2017.

Commenting on the agreement, Chairman of the «Histadrut» AVI Nissenkorn said: «Today we took an important step to improve the economic security and decent life for all citizens of Israel even after reaching retirement age. This process is actually a historical correction of the agreement on compulsory pensions, which will give the opportunity to increase savings in pension funds for each employee to thousands of shekels. I thank Shraga Leave for their cooperation in the development agreement, I also want to thank the Chairman of the Finance Committee of the Knesset Moshe Gaffney and member of the Knesset Miki Zohar for his contribution to the signing of the agreement».

Mandatory pension contributions for employees will rise by one percent 23.02.2016

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