Mad Hon · Pension savings

Measure the gap between your pension and your retirement

Measure the gap between your pension and your retirement. A step-by-step Mad Hon guide for your Pension savings score, written for olim.

1. Collect four numbers, and keep the foreign accounts separate.
You need your age, your insured salary, your total contribution rate including the employer and severance components, and the total accumulated across every Israeli pension account. Har HaKesef, the free Ministry of Finance register of savings products held in your name, gives you the last one including accounts you have forgotten. If you also hold a 401(k), an IRA, an RRSP, a SIPP or a South African retirement annuity, list those separately in their own currency. They are part of what you will retire on and they are not part of the Israeli calculation, and mixing them is how people talk themselves out of a real gap.
2. Look up your own retirement age rather than assuming one.
Israeli statutory retirement age is 67 for a man. For a woman it is not a single number: it depends on date of birth and is still on a rising schedule, so look yours up on the National Insurance Institute pages rather than taking a round figure from an article. Two more things behave differently here than an arriving oleh expects. The old-age allowance from Bituach Leumi is a separate and modest layer with its own qualifying-period rules, so it is not the equivalent of a full state pension in every country people arrive from. And someone who arrived as an adult has fewer Israeli insurance years than a native of the same age, which is a reason to find out the number early rather than a reason to be alarmed by it.
3. Set a target income, and treat the rule of thumb as a rule of thumb.
The common reference is that a retirement income somewhere around 70 percent of pre-retirement salary preserves the same standard of living, on the reasoning that commuting, work clothes, a mortgage and the pension deposit itself have all stopped. It is a starting point that circulates widely, not a finding. Your own figure depends on whether the mortgage really will be finished, whether you expect to be supporting anyone, and whether you plan to spend part of the year in another country, which for an oleh family is a live question rather than a hypothetical.
4. Understand the conversion coefficient, which your home-country pot did not have.
An Israeli pension pays a monthly annuity, and the balance is turned into it by dividing by a conversion coefficient, mekadem hamara. The coefficient reflects life expectancy at your retirement age and the survivors cover attached to the fund, and a larger coefficient means a smaller monthly payment from the same balance. It is not necessarily fixed for life in every arrangement, and the terms differ between fund types. Ask your fund in writing what coefficient applies to you and whether it is guaranteed, because the answer changes what any balance is actually worth as income.
5. Read any accumulation-for-your-age yardstick with the oleh caveat attached.
Rules of thumb circulate for what a person should have accumulated by a given age, and the one this page uses for its target multiplies annual salary by a factor that grows with age. It is a rough yardstick, useful for direction and no more. It also misreads an oleh in one specific way: it assumes accumulation started in Israel in your twenties. If you arrived at 35, a shortfall against it is measuring the years you were somewhere else, which is a fact about your biography rather than about your saving. What is diagnostic is the second half: whether the rate, the fees and the number of accounts are where they should be from here on.
6. Work out which of four things is producing the gap.
Four causes, and they call for different work. A contribution rate below the statutory minimum, which means money that should be arriving is not. Management fees taking a share of the accumulation every year, charged both on the balance and on each deposit. Accounts split across several employers, each carrying its own fee against a balance no longer being added to. Or simply fewer years, which for an oleh is usually the largest single component and the only one nothing can be done about. Identify the dominant one before acting, because the fix for each is a different piece of work.
7. Sequence the fixes by how quickly you can actually act on them.
The contribution rate is the one you can change this month, with a single instruction to payroll and no agreement needed from anyone else, and it compounds for every year that follows. Fees are a negotiation with a fund manager or a decision to move. Consolidating split accounts is paperwork through the pension clearing house, and it carries one real check before you file, which is what the disability and survivors cover on an old account would cost repriced at your age now. Those are three separate actions, and each has its own guide.

Measure the gap between your pension and your retirement. A step-by-step Mad Hon guide for your Pension savings score, written for olim.

1. Collect four numbers, and keep the foreign accounts separate.

You need your age, your insured salary, your total contribution rate including the employer and severance components, and the total accumulated across every Israeli pension account. Har HaKesef, the free Ministry of Finance register of savings products held in your name, gives you the last one including accounts you have forgotten. If you also hold a 401(k), an IRA, an RRSP, a SIPP or a South African retirement annuity, list those separately in their own currency. They are part of what you will retire on and they are not part of the Israeli calculation, and mixing them is how people talk themselves out of a real gap.

2. Look up your own retirement age rather than assuming one.

Israeli statutory retirement age is 67 for a man. For a woman it is not a single number: it depends on date of birth and is still on a rising schedule, so look yours up on the National Insurance Institute pages rather than taking a round figure from an article. Two more things behave differently here than an arriving oleh expects. The old-age allowance from Bituach Leumi is a separate and modest layer with its own qualifying-period rules, so it is not the equivalent of a full state pension in every country people arrive from. And someone who arrived as an adult has fewer Israeli insurance years than a native of the same age, which is a reason to find out the number early rather than a reason to be alarmed by it.

3. Set a target income, and treat the rule of thumb as a rule of thumb.

The common reference is that a retirement income somewhere around 70 percent of pre-retirement salary preserves the same standard of living, on the reasoning that commuting, work clothes, a mortgage and the pension deposit itself have all stopped. It is a starting point that circulates widely, not a finding. Your own figure depends on whether the mortgage really will be finished, whether you expect to be supporting anyone, and whether you plan to spend part of the year in another country, which for an oleh family is a live question rather than a hypothetical.

4. Understand the conversion coefficient, which your home-country pot did not have.

An Israeli pension pays a monthly annuity, and the balance is turned into it by dividing by a conversion coefficient, mekadem hamara. The coefficient reflects life expectancy at your retirement age and the survivors cover attached to the fund, and a larger coefficient means a smaller monthly payment from the same balance. It is not necessarily fixed for life in every arrangement, and the terms differ between fund types. Ask your fund in writing what coefficient applies to you and whether it is guaranteed, because the answer changes what any balance is actually worth as income.

5. Read any accumulation-for-your-age yardstick with the oleh caveat attached.

Rules of thumb circulate for what a person should have accumulated by a given age, and the one this page uses for its target multiplies annual salary by a factor that grows with age. It is a rough yardstick, useful for direction and no more. It also misreads an oleh in one specific way: it assumes accumulation started in Israel in your twenties. If you arrived at 35, a shortfall against it is measuring the years you were somewhere else, which is a fact about your biography rather than about your saving. What is diagnostic is the second half: whether the rate, the fees and the number of accounts are where they should be from here on.

6. Work out which of four things is producing the gap.

Four causes, and they call for different work. A contribution rate below the statutory minimum, which means money that should be arriving is not. Management fees taking a share of the accumulation every year, charged both on the balance and on each deposit. Accounts split across several employers, each carrying its own fee against a balance no longer being added to. Or simply fewer years, which for an oleh is usually the largest single component and the only one nothing can be done about. Identify the dominant one before acting, because the fix for each is a different piece of work.

7. Sequence the fixes by how quickly you can actually act on them.

The contribution rate is the one you can change this month, with a single instruction to payroll and no agreement needed from anyone else, and it compounds for every year that follows. Fees are a negotiation with a fund manager or a decision to move. Consolidating split accounts is paperwork through the pension clearing house, and it carries one real check before you file, which is what the disability and survivors cover on an old account would cost repriced at your age now. Those are three separate actions, and each has its own guide.