Mad Hon · Pension savings

Raise your pension contribution rate

Raise your pension contribution rate. A step-by-step Mad Hon guide for your Pension savings score, written for olim.

1. Ask payroll for the rates, not the amounts.
The payslip prints shekel amounts; the instruction payroll actually holds is a percentage, and the percentage is what gets changed. Ask for the three separate rates: your own contribution, the employer contribution, and the severance component. The statutory total for an employee is 18.5 percent, made up of 6 from you, 6.5 from the employer and 6 towards severance.
2. Start with your own share, because nobody else has to agree.
Most employees sit at the statutory minimum not because it was discussed but because it is what the payroll system applies by default. Raising your own share needs one instruction to payroll and no matching move from the employer. Ask for it in writing and expect it to take effect on the following month.
3. If you are self-employed, this is an instruction to the fund.
There is no payroll department on that side. The minimum is set on bands of your income, you file the deposits yourself, and raising the rate means updating the arrangement with the fund manager or agent and adjusting the standing order to match.
4. Check the tax relief is being used in full.
Israeli pension deposits attract two different reliefs, up to separate ceilings: a credit against tax on the employee side, and a deduction that mainly serves the self-employed and deposits above the credit ceiling. Which one applies to an extra shekel depends on your marginal rate and where you already sit against the ceilings. That calculation is worth doing against your own payslip, either with an accountant or through the Tax Authority information line.
5. Check the employer side against your contract.
Compare the employer rate payroll quoted you against your employment agreement and against the statutory minimum. Where the employer is at the minimum and your contract allows more, ask. And if the job is new, check when the fund was actually opened before reading anything into a low figure: an employee with no earlier Israeli pension only begins accruing after six months in the role, so a small number in a first year is that rule rather than an employer at fault.

Raise your pension contribution rate. A step-by-step Mad Hon guide for your Pension savings score, written for olim.

1. Ask payroll for the rates, not the amounts.

The payslip prints shekel amounts; the instruction payroll actually holds is a percentage, and the percentage is what gets changed. Ask for the three separate rates: your own contribution, the employer contribution, and the severance component. The statutory total for an employee is 18.5 percent, made up of 6 from you, 6.5 from the employer and 6 towards severance.

2. Start with your own share, because nobody else has to agree.

Most employees sit at the statutory minimum not because it was discussed but because it is what the payroll system applies by default. Raising your own share needs one instruction to payroll and no matching move from the employer. Ask for it in writing and expect it to take effect on the following month.

3. If you are self-employed, this is an instruction to the fund.

There is no payroll department on that side. The minimum is set on bands of your income, you file the deposits yourself, and raising the rate means updating the arrangement with the fund manager or agent and adjusting the standing order to match.

4. Check the tax relief is being used in full.

Israeli pension deposits attract two different reliefs, up to separate ceilings: a credit against tax on the employee side, and a deduction that mainly serves the self-employed and deposits above the credit ceiling. Which one applies to an extra shekel depends on your marginal rate and where you already sit against the ceilings. That calculation is worth doing against your own payslip, either with an accountant or through the Tax Authority information line.

5. Check the employer side against your contract.

Compare the employer rate payroll quoted you against your employment agreement and against the statutory minimum. Where the employer is at the minimum and your contract allows more, ask. And if the job is new, check when the fund was actually opened before reading anything into a low figure: an employee with no earlier Israeli pension only begins accruing after six months in the role, so a small number in a first year is that rule rather than an employer at fault.