What Is Gemel Yeladim?
גמל ילדים (Gemel Yeladim) is a government-sponsored long-term savings program for every child in Israel. Launched in 2017, it replaced the previous system of higher cash child allowances with a model that combines a smaller cash payment with an automatic investment account for each child.
The idea is simple: instead of giving parents cash that gets absorbed into daily expenses, the government deposits money directly into a managed investment account in the child's name. The money grows over the child's entire childhood and becomes available at age 18, giving young adults a financial head start.
How It Works
Every child registered in Israel automatically receives a Gemel Yeladim account. Here is how the contributions flow:
- Base government deposit: ביטוח לאומי (Bituach Leumi) deposits NIS 50 per month per child automatically. This happens whether you do anything or not.
- Parent top-up option: You can instruct Bituach Leumi to divert an additional NIS 50 per month from your child allowance (Kitzvat Yeladim) into the account. When you do this, the government matches that NIS 50 with another NIS 50 of its own.
- Total with matching: NIS 50 (base) + NIS 50 (your contribution from the allowance) + NIS 50 (government match) = NIS 150/month flowing into your child's account.
The parent top-up is one of the best financial decisions you can make as a new parent in Israel. The government match effectively doubles your NIS 50 contribution. There is no investment product in the market that offers a guaranteed 100% return on day one.
Choosing a Fund Manager
When the account is first created, Bituach Leumi assigns a default fund manager. You are not stuck with this choice. There are over a dozen licensed fund managers offering Gemel Yeladim accounts, and you can switch at any time without penalty.
The key factors to compare when choosing a fund manager:
- Management fees (Dmei Nihul): These are the annual fees charged on your balance and on new deposits. Even small differences in fees compound significantly over 18 years. Look for managers charging below 0.5% on the balance and below 2% on deposits. Some of the lowest-cost managers charge as little as 0.2% on the balance.
- Historical performance: While past performance does not guarantee future results, consistently underperforming managers should be avoided. Compare returns over 3-year and 5-year periods where available.
- Investment track selection: Different managers offer different track options. Ensure your preferred manager offers the track you want.
Investment Tracks
Each fund manager offers multiple investment tracks, called מסלול השקעה (Maslul Hashka'a). The main categories are:
- Stock-heavy (Maniati): 50-80% equities. Highest expected returns over 18 years but with more short-term volatility. Recommended for children under 12 who have a long time horizon.
- Balanced (General / Klali): A mix of stocks and bonds, typically 30-50% equities. Moderate risk and return. The default track for most managers.
- Conservative (Agai / Bond-focused): Mostly government and corporate bonds with minimal equity exposure. Lower volatility but significantly lower expected returns over long periods. May make sense only in the last 2-3 years before withdrawal at 18.
- Halacha-compliant (Maslul Halacha): An investment track that follows Jewish law regarding interest and permitted investments. Available from several managers.
For a newborn or young child, the stock-heavy track is generally the mathematically optimal choice. With 15-18 years of investment horizon, short-term market drops are irrelevant. The difference between a stock-heavy and conservative track over 18 years can be tens of thousands of shekels.
Withdrawal Rules
The account matures when the child turns 18. At that point, the now-adult child can:
- Withdraw the full balance as a lump sum. There are no restrictions on how the money is used. It can fund university, a gap year, a car, or further investment.
- Keep the money invested in the Gemel Yeladim account. The money continues to grow under the same conditions but no new government deposits are made.
- Roll into another savings vehicle such as a regular Kupat Gemel or Keren Hishtalmut (if employed).
Early withdrawal before age 18 is generally not permitted except in special circumstances (severe illness, death of a parent). The lock-up is by design, ensuring the savings reach the child.
How to Check and Change Your Fund
Follow these steps to review your children's Gemel Yeladim accounts:
- Log into Bituach Leumi: Use the Bituach Leumi website or app with your Israeli ID and password.
- Find the Gemel Yeladim section: Navigate to "Children's Savings" (Chisachon Yeladim) in the menu.
- Review current status: You will see each child's account, the current fund manager, investment track, balance, and whether the parent top-up is active.
- Make changes: You can switch fund managers, change investment tracks, and activate or deactivate the parent top-up. Changes are processed within 1-2 months.
You can also call Bituach Leumi at *6050, but the website is faster and available in English for most functions.
Comparing Fund Performance
The Gemel Net website (gemelnet.mof.gov.il), operated by the Ministry of Finance, publishes performance data for all provident funds including Gemel Yeladim. You can compare:
- Annual returns by track type across all managers
- Fee structures (management fees on deposits and on balance)
- Total accumulated returns over 3-year and 5-year periods
Focus on the combination of low fees and strong long-term returns. A fund that charges 0.2% fees with 8% average annual returns will beat a fund charging 1.0% fees with the same gross return by tens of thousands of shekels over 18 years.
Practical Tips for Olim
- Act early: Activate the parent top-up as soon as your children's accounts are created. Every month of delay costs you a NIS 50 government match you cannot recover.
- Choose stocks for young children: With a full 15-18 year horizon, the stock-heavy track has historically outperformed by a wide margin.
- Consider switching to conservative near age 18: When your child is 15-16, think about shifting to a balanced or conservative track to protect accumulated gains before withdrawal.
- Do not forget about older children: If you made aliyah with teenagers, their accounts have a shorter investment horizon. A balanced track may be more appropriate than an aggressive one.
- Review annually: Set a yearly reminder to check performance and fees. Fund managers occasionally change their fee structures.