Finance Ministry seeks pensions for all

The plan also proposes a gradual introduction of an income tax credit for the poorest wage earners, enforcement of labor laws such as minimum wage and overtime.

April 30, 2007 07:24
2 minute read.
pension plan 88 298

pension plan 88 298. (photo credit: Ariel Jerozolimski)


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The Finance Ministry on Sunday unveiled a plan to bridge the gap between the country's rich and poor, including standardization of pension plans for all workers, a negative income tax and an increase in the value of corporate cars. According to the program submitted to the Knesset Finance Committee, a law would be introduced that seeks to standardize pension plans for workers in business organizations while at the same time assigning the Finance Ministry with a significant amount of power in shaping and defining those plans, even after a collective agreement has been reached. "This is one of the worst laws ever presented to the Knesset," said Uriel Lynn, chairman of the Federation of Israeli Chambers of Commerce, in response to the proposed pension-reform law. Never in the Knesset's history has a single ministry been given so much power to change the definition of a collective agreement between employers and employees, he claimed. "It is contradictory for a clause allowing the Ministry of Finance to change the basic principles of an agreement to be included in the law, as once an agreement is reached, then it should be final," Lynn noted. The plan also proposes a gradual introduction of an income tax credit for the poorest wage earners, enforcement of labor laws such as minimum wage and overtime and the reduction of the level of income tax to those employees who fall into the third and fourth tax brackets, which translates into an average monthly salary between NIS 4,200-11,140. Additionally, the Finance Ministry is seeking to increase the value of "company cars" that employers provide for their employees. While Lynn is in favor of the other measures proposed by the Finance Ministry, he called the law regarding the pension plans a "joke" and one which, if approved, would give the Ministry of Finance "mega-power" to change conditions agreed upon by workers and employees when constructing pension agreements. "No employment organization is going to agree to something that isn't final, and no labor organization is going to agree either," Lynn said. Business organizations in Israel today have existing pension plans that they have arranged with the Histadrut, however, each of the organizations has arranged its own plan. Additionally, there are more than one million employees who do not have pension clauses drawn into their contracts at all. This law not only seeks to ensure that every employee receives a pension, but seeks to standardize the plans that the business organizations arrange with the Histadrut. According to Lynn, however, the Finance Ministry is overstepping its bounds as it wants to give itself the final say on any collective pension agreements.

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