Elderly couple 58.
(photo credit: Paul E. Rodriguez/Orange County Register/MCT)
The protest movement has hit Israel’s streets to demand a welfare state and
far-reaching changes in a wide range of areas. A lot of topics are being
discussed at the protesters’ tent camps around the country, but the issue of
pensions is not one of them.
It is no surprise that pensions are not on
the agenda of the young protesters, as pensions are not on their horizon. People
forget things that are remote and abstract, not to mention a subject that is
loaded with mathematical formulas and legal terms that are hard to understand
and far from the protesters’ world.
The protests’ leaders are young men
and women – strong, healthy and at the start of their careers. They claim that
the current economic arrangements are unfair and unjust.
protesters say they want social justice and to restore Israel’s values as a
Welfare is not only measured by fulfilling immediate
material needs, such as an inexpensive home, discounts for diapers and
affordable student dorms. Welfare is also worrying about a future when the
protesters will no longer be young, healthy and strong, but when they are on the
threshold of ending their lives as productive workers; in other words, when they
The right to a pension is fair, and every worker deserves
In a series of measures beginning in 1995, the government has been
transferring all its pension responsibilities onto its citizens. The directives
apply to everyone who has joined the workforce since that year.
then, employees set aside money for Histadrut-run pension funds, buying pension
rights calculated on the basis of their income and seniority.
correctly argued that this system was problematic. There was a huge actuarial
deficit, and strong workers committees extorted improved terms at the expense of
weak committees. But the principle of shared risk between the individual and the
pension fund was wise and absolutely just.
Since 1995, the source of
employees’ pensions is only money that people can accumulate and the return on
it. In contrast to their parents and older workers, young workers have no
pension rights and no safety net of any kind.
The individual must ensure
a minimum provision for himself or herself and personally ensure appropriate
rates. In other words, the government has abandoned any responsibility for
pensions for its citizens and created a situation in which the individual bears
the entire risk of his or her pension. The citizen – a worker who becomes a
pensioner – has to personally bear the cost of miscalculations or low economic
The risk from rising life expectancy and falling birth rates,
which increase the number of retirees at the expense of working people who
finance them, or from financial disasters, come at the individual’s
The generation protesting in the streets today, whose leaders
are all under 30, are liable to discover that on the day they retire from the
labor force, their income is reduced and mostly dependent on old-age pensions
from the National Insurance Institute.
That is why I ask you to add to
your list of demands, which the media is reporting you are formulating, a
critical and material correction to the pension system.
Workers should be
allowed to personally have a degree of guaranteed pension rights, which are
calculated on the basis of income and seniority, in addition to the current
savings component. This will prevent an actuarial deficit, while increasing
workers’ pension security. The current management mechanism, Amitim, which
manages the nationalized senior pension funds on behalf of the state, could run
Only a long-term savings system for individuals on one hand,
and pension rights that are independent of the amount of savings on the other,
will permit a properly balanced pension. Only this will give a safety net for
people under 40, so that the economic rights they want to achieve will continue