Israeli Companies and organizations should, and are recommended to, adopt the retirement preparation procedure adopted by the Israeli Ministry of Foreign affairs whole heartedly: periodically the ministry invites it employees reaching the age of retirement, 67, to a concentrated seminar of several days relating to the topic. Itzhak Eldan, 76, who worked in the ministry for 40 years, among his duties the former Israeli ambassador to Denmark, UNESCO and the European Union, also participated in the unique program, 10 years ago, on the eve of his retirement. Eldan is also the first to tell you how much this series of meetings was, and still is, meaningful for him and his diplomatic friends.
“The preparatory meetings for retirement are organized by the Individual and Welfare Division, which is a very active and committed unit for employees, because the ministry is one large family,” explained Eldan, who currently serves as a principal for the Israeli School for Young Ambassadors, which operates at the Israeli Center for Young Leaders. “At these meetings, you receive training from experts on various issues in the field of pensions that the ministry invited. These are experts in provident funds, education funds, budgetary pensions, in the field of medical and health coverage, and even experts who provide advice and guidance on issues of marriage and leisure after retirement. This is really exemplary.”
It is safe to assume that it was not always this way.
“True. When I fulfilled my childhood dream and was accepted into the Foreign Ministry in 1970 as a cadet, which is the lowest level in the diplomatic hierarchy, who knew then about pension rights, pension contributions for the future or budgetary pensions? Almost no one. The salary was low, because they always said you come to the Foreign Affairs Ministry because of a sense of mission and not for the money - which is true. We knew that from this minimal salary we were already losing 2.5% towards pension, but who thought about what would happen to him in another 30 or 40 years? Who sat back then to calculate whether this amount would suffice or would not suffice to live in dignity after retirement?”
When did you feel that there was a change in the awareness of the Ministry with regards to smart employee retirement planning?
“In the early 90’s, for the first time in the history of the Foreign Affairs Ministry, a memo was published by the deputy director general dealing with pension counseling. With this circular, and in meetings that followed, employees were already offered the chance to examine the sums they had accumulated so far, and they were also advised to take important steps in the field. For example, to increase the allocation to monthly savings, to make decisions regarding budgetary pensions, to open to pension funds and to choose tracks that bear yields for education funds. You have to remember that a diplomat who has lived abroad for many years, he and his family have become accustomed to a high standard of living, which in order to preserve after retirement requires the allocation of larger amounts of money. Today I can say that the change is in the attitude, along with the preparatory meetings that came later, that opened my eyes literally.”
In retrospect, are you satisfied with the financial decisions you made on the eve of your retirement?
Towards the end of the period, I looked and checked here and there, and I knew that with the budgetary pension and the additional pension funds I was starting off with a calm head and on a fairly safe route. However, it was clear to me that I would continue to work even after retirement age - because I am an active person, and because I wanted to continue to maintain a high standard of living. Since then, I’ve managed to realize two great dreams that I’ve nurtured for years. The first is the establishment of the Ambassador’s Club, in which all 90 foreign ambassadors serving in Israel are members. It is a role that I do voluntarily and with great pleasure.”
What is the second dream you’ve fulfilled?
This is a dream that I still realize daily, it should be noted for payment, and that is in my capacity as director of the Israeli School for Young Ambassadors. I served in the past as head of the School for Diplomats and Cadet Training at the Foreign Affairs Ministry, and my current job really complements this. This project operates in dozens of schools around the country, and to this day thousands of high school students in grades 9 through 11 from different places and backgrounds have taken part. We bring them together with foreign ambassadors and Israeli diplomats, take them to visit parliaments and foreign offices around the world and teach them how to conduct diplomatic and business activities in the global village. This is a move to nurture a young leadership without borders, which in fact also builds the future generation of Israeli diplomacy. This is the generation who go out into the wider world with the goal of empowering the State of Israel, and this includes, among others our struggle against the boycott movement - BDS.”
Disclaimer: the bank is not a tax advisor. Everything stated above only comprises general information and explanation, that does not constitute pension advice, investment advice of tax advice, and it does not replace personal advice subject to provisions by law.
Important to Know
One of the main goals of ongoing pension consulting is to enable a turnover rate (the ratio between the income before retirement and the monthly pension) that will suit the standard of living of the employee during retirement. In addition to the decision of Yitzhak Eldan to continue working, there are other possibilities to maintain the standard of living during retirement: postponement of the retirement age, the use of education funds as an annuity for supplemental income, use of financial assets (ex. securities portfolio) for receiving monthly income, and a deposit for a “recognized pension” exempt from tax (amendment 190).