Hirchson aims to pass pension law this year

"In the current situation, most low-earning workers don't have a pension savings, which makes it likely they will live below the poverty line when they retire."

By
February 4, 2007 08:03
2 minute read.

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user uxperience almost completely free of ads
  • Access to our Premium Section and our monthly magazine to learn Hebrew, Ivrit
  • Content from the award-winning Jerusalem Repor
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later Don't show it again

Finance Minister Avraham Hirchson said Thursday he expects his proposal for a mandatory pension plan to be passed into law this year and gave businesses until the end of 2008 to negotiate voluntary pension agreements with their workers. "In the current situation, most low-earning workers don't have a pension savings, which makes it likely they will live below the poverty line when they reach pension age," Hirchson said. "The proposal to obligate pension benefits for all workers will significantly reduce the number of elderly with no income." Hirchson gave more details about the proposed pension program he announced earlier this week as part of the Treasury's reforms to encourage work participation and reduce social gaps. He presented the plan, which also proposes the introduction of negative income taxes and car leasing reforms, to the government Thursday to be discussed in Sunday's cabinet meeting, By way of example and as a guideline, the finance ministry said employees should set aside 5.5 percent of their salary for pension, while employers would provide 6% for severance pay and another 6% for pension, setting the savings period at 37 years out of a potential 47-year working life. The investments should have a net yield of 3.74%. The pension funds should include death and disability insurance coverage, the ministry said. Hirchson said he expects to have all workers under a pension scheme by 2010, which he stressed the Finance Ministry would intervene to enforce if next year's deadline is not met. Such a government intervention came under fire from some quarters in the private sector, however, which remain skeptical about the benefits of the program. "What tends to happen is that the government gets too involved in the way people handle their affairs and it usually ends up being to the detriment to the man on the street," said financial adviser Douglas Goldstein, president of Profile Investment Services. "I like the idea of everyone having a pension plan, but when they use the word mandatory pension plan it implies that the government is going to try to create a huge amount of bureaucracy to force the private sector to do things rather inefficiently." Goldstein said he would prefer to see the government give tax incentives to people to manage their own retirement savings, adding that the proposed system would work to the detriment of the small business owner who will now have the added burden of managing pension plans. "I think they are saying the right things but they are not going to do the right thing," he said. "It's wrong to force companies to be responsible for people. Each should be encouraged to take care of themselves."

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS