Pension for the Masses

As of January 2008, it is obligatory to provide pension insurance to every employee in Israel. This obligation follows from a July 2007 collective agreement signed between the Histadrut (national labor union) and the Coordinating Bureau of Economic Organizations. The agreement was intended to remedy the hardship faced by thousands of members of the workforce whose employers did not provide pension plans to ensure their financial future. The agreement obligates every employer in Israel to provide a pension plan for its employees and establishes the percentages that the employer and employee must contribute to the pension.

The Central Bureau of Statistics’ Social Survey data indicate a significant increase in the percentage of employees in Israel who have a pension plan (retirement fund, directors’ insurance, or subsidized long-term savings plan) over the course of the years since this change. According to the data, the percentage of employees in Israel with a pension plan rose from 64% in 2007 to 80% in 2010. In Jerusalem, 56% had pension plans in 2007 and 66% in 2010. The percentage of Jerusalemites with pension plans in 2010 was lower than the figure for residents of Tel Aviv (85%), Rishon LeZion (82%), and Haifa (80%).

The data indicate a clear correlation between income level and percentage of employees with a pension plan. For example, among employees with an individual net monthly income of NIS 2,000 or below, only 42% had such a plan, whereas among those with an income NIS 7,500 or above, the percentage of pension plan owners was over 95%. There are also significant differences among the employees of different sectors. The percentage of pension plan owners is high among employees in the electricity and water sector (96%), public services (95%), and banking, insurance, and finance (93%). In contrast, low percentages were recorded among employees of hospitality and food services (48%), construction (51%), and agriculture (60%).

Analysis of the conditions facing employees of human resources agencies (“temp agencies”) reveals that the percentage of pension plan owners among these employees rose from 40% in 2007 to 62% in 2010, but is still lower than the figure for all employees (80%).