Gov't to open savings accounts for every child in 2017

"The 'savings account for every child' program is another step toward closing the social gaps in Israel, toward advancing equal opportunities for the middle class and weak segments."

By NIV ELIS
Updated: JUNE 22, 2016 01:33
Kulanu leader Moshe Kahlon (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Kulanu leader Moshe Kahlon
(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Finance Minister Moshe Kahlon may have just oneupped Oprah Winfrey.
Whereas Oprah famously gave away great gifts on her show, most memorably on the episode where everyone was gifted their own automobile (“You get a car! And you get a car! And you get a car!”), Kahlon on Tuesday signed a regulation establishing a government- backed savings account for every Israeli child (“You get a savings account! And you get a savings account!”).
“The ‘savings account for every child’ program is another step toward closing the social gaps in Israel, toward advancing equal opportunities for the middle class and weak segments, and even raising awareness about saving,” Kahlon said.
“The program will allow anyone who reaches the age of 18 to begin their adult lives with NIS 20,000 in hand and open new opportunities for themselves,” he added.
Kahlon pushed for the initiative last July when hammering out the 2015-16 budget, approved in November, as an alternative to fully reinstating child welfare benefits. The regulation signed Tuesday will put the accounts into effect in January, 2017.
The idea behind the program is that instead of simply paying out benefits to parents, the government will open a savings account for each child and set aside money each year in every account until the child turns 18, at an estimated cost of NIS 2.65 billion a year. The National Insurance Institute will contribute NIS 50 a month, plus an extra NIS 500 when they turn 18. If the child delays withdrawing the funds until she is 21, the NII will contribute an addition NIS 500.
Parents will have the option of diverting an additional NIS 50 of their child allotments toward the account each month, and have some options as to how and where the money will be held.
The provision of a large, lump-sum of cash to every child upon entering adulthood is meant to help level the playing field, giving young adults the option to overcome early financial hurdles.
“Providing an initial sum for every child at the beginning of their adult life, without regard to their parents’ financial status, will expand the range of options before them, such as education, opening a business, or professional training,” said Deputy Finance Minister Yitzhak Cohen.
The funds could also form the basis of a retirement account or the seeds of a down-payment for an apartment.
Because the government will only start putting funds aside next year, the sums made available to people turning 18 in the coming years will be lower than those for children who will continue to accrue funds over longer periods of time.